As filed with the Securities and Exchange Commission on February 1, 2008
Registration No. 333-146147
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
ON
FORM S-1
TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HAMBRECHT ASIA ACQUISITION CORP.
(Exact Name of Registrant as Specified in his Charter)
|
|
|
|
|
|
Cayman Islands
|
|
6770
|
|
N/A
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(Primary Standard Industrial
Classification Code Number)
|
|
(I.R.S. Employer
Identification Number)
|
13/F Tower 2
New World Tower
18 Queens Road Central
Hong Kong
852-2801-5383
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
John Wang
13/F Tower 2
New World Tower
18 Queens Road Central
Hong Kong
852-2801-5383
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copies to:
|
|
|
|
Mitchell S. Nussbaum, Esq.
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
(212) 407-4000
Fax: (212) 407-4990
|
|
Douglas S. Ellenoff, Esq.
Stuart Neuhauser, Esq.
Adam Mimeles, Esq.
Ellenoff Grossman & Schole, LLP
370 Lexington Avenue
New York, New York 10017
(212) 370-1300
Fax: (212) 370-7889
|
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.
x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
TABLE OF CONTENTS
CALCULATION OF REGISTRATION FEE
|
|
|
|
|
|
|
|
|
|
Title of each Class of
Security being Registered
|
|
Amount Being
Registered
|
|
Proposed
Maximum
Offering Price Per
Security
(1)
|
|
Proposed
Maximum
Aggregate
Offering
Price
(1)
|
|
Amount of
Registration Fee
|
|
Units, each consisting of one ordinary share, $0.001 par value, and one Warrant
(2)
|
|
|
4,600,000
|
|
|
$
|
8.00
|
|
|
$
|
36,800,000.00
|
|
|
$
|
1,129.76
|
|
|
Ordinary Shares included in the Units
(2)
|
|
|
4,600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(3)
|
|
Warrants included in the Units
(2)
|
|
|
4,600,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(3)
|
|
Ordinary Shares underlying the warrants included in the Units
(2)
(4)
|
|
|
4,600,000
|
|
|
$
|
6.00
|
|
|
$
|
27,600,000.00
|
|
|
$
|
847.32
|
|
|
Representative’s Unit Purchase Option
|
|
|
1
|
|
|
$
|
100.00
|
|
|
$
|
100.00
|
|
|
|
|
|
|
Units underlying the representative’s Unit Purchase Option (“Representative’s Units”)
(4)
|
|
|
280,000
|
|
|
$
|
10.00
|
|
|
$
|
2,800,000.00
|
|
|
$
|
85.96
|
|
|
Ordinary Shares included as part of the Representative’s Units
(4)
|
|
|
280,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(3)
|
|
Redeemable warrants included as part of the Representative’s Units
(4)
|
|
|
280,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(3)
|
Ordinary Shares underlying the warrants included in the
Representative’s Units
(4)
|
|
|
280,000
|
|
|
$
|
6.00
|
|
|
$
|
1,680,000.00
|
|
|
$
|
51.58
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
68,880,100.00
|
|
|
$
|
2,114.62
|
(5)
|
|
|
(1)
|
Estimated solely for the purpose of calculating the registration fee.
|
|
|
(2)
|
Includes 600,000 Units, consisting of 600,000 Ordinary Shares and 600,000 Warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any.
|
|
|
(3)
|
No fee pursuant to Rule 457(g).
|
|
|
(4)
|
Pursuant to Rule 416, there is also being registered such indeterminable number of additional ordinary shares as may be issued to prevent dilution resulting from share splits, share dividends or similar transactions.
|
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
TABLE OF CONTENTS
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
|
|
|
|
|
PRELIMINARY PROSPECTUS
|
|
SUBJECT TO COMPLETION, DATED FEBRUARY 1, 2008
|
$32,000,000
Hambrecht Asia Acquisition Corp.
4,000,000 Units
Hambrecht Asia Acquisition Corp. is a Cayman Islands blank check company recently formed to acquire one or more operating businesses through a merger, stock exchange, asset acquisition or similar business combination, or control through contractual arrangements, having its primary operations in the People’s Republic of China. We will not seek to acquire a business with its primary operations outside of the People’s Republic of China. Our efforts in identifying a prospective target business will not be limited to a particular industry. If we do not consummate a business combination within 18 months of the closing date of our initial public
offering, but have entered into a letter of intent or definitive agreement with respect to a business combination within such 18 month period, we will have an additional 6 months in which to consummate a business combination. However if we anticipate that we will not be able to consummate a business combination within 24 months, we may seek shareholder approval to extend the period of time to consummate a business combination by an additional 12 months. In order to extend the period of time to 36 months (i) public shareholders must approve the extension and (ii) public shareholders owning no more than one share less than 30.0% of the shares sold in this offering may have exercised their redemption rights as described in this prospectus. The 36 month period will be referred to throughout this prospectus as the extended period. If we fail to sign a letter of intent or definitive agreement within such 18 month period or if we fail to consummate a business combination within such 24 month
period, or the extended period, as the case may be, we will liquidate and distribute to our public shareholders the net proceeds of this offering, plus interest, less certain costs, each as described in this prospectus. We do not have any specific merger, stock exchange, asset acquisition or similar business combination, or contractual arrangements under consideration or contemplation. We have not, nor has anyone on our behalf, contacted, or been contacted by, any potential target business or had any substantive discussions, formal or otherwise, with respect to such a transaction.
This is the initial public offering of our units. Each unit consists of one ordinary share and one warrant. We are offering 4,000,000 units. The public offering price will be $8.00 per unit. Each warrant entitles the holder to purchase one ordinary share at a price of $6.00 commencing on the later of our consummation of a business combination or one year from the date of this prospectus, provided in each case that there is an effective registration statement covering the ordinary shares underlying the warrants in effect. The warrants will expire five years from the date of this prospectus, unless earlier redeemed.
AEX Enterprises Limited, a company controlled by Elizabeth R. Hambrecht, wife of Robert Eu, one of our founders and our Chairman and Secretary, and William R. Hambrecht, Robert Eu’s father-in-law, W.R. Hambrecht + Co., LLC and the Hambrecht 1980 Revocable Trust, each an entity controlled by William Hambrecht, Shea Ventures LLC, a company controlled by Edmund H. Shea Jr., and Marbella Capital Partners Ltd., a company owned by John Wang, our Chief Executive Officer, have agreed to purchase an aggregate of 1,150,000 warrants at a price of $1.00 per warrant ($1,150,000 in the aggregate) in a private placement that will occur immediately prior to this
offering. Elizabeth R. Hambrecht owns approximately 25% and William R. Hambrecht controls (through a trust of which he is trustee) approximately 38% of the voting shares of AEX Enterprises Limited. William Hambrecht is a control person of W.R. Hambrecht + Co., LLC and is the trustee of the Hambrecht 1980 Revocable Trust. The proceeds from the sale of the warrants in the private placement will be deposited into a trust account and subject to a trust agreement, as described below, and will be part of the funds distributed to our public shareholders in the event that we are unable to complete a business combination within the prescribed time. Except as otherwise provided in the prospectus, AEX Enterprises Limited has agreed not to transfer, assign or sell any of these warrants (as well as the ordinary shares to be issued upon exercise of these warrants) until after we consummate a business combination.
Currently, no public market exists for our units, ordinary shares or warrants. We anticipate being quoted on the OTC Bulletin Board under the symbol “[
U]” upon consummation of this offering. The units will begin trading on or promptly after the date of this prospectus. Each of the ordinary shares and warrants will trade separately on the 45th day after the date of this prospectus (unless Broadband Capital Management LLC, the representative of the underwriters, determines that an earlier date is acceptable), subject to our filing a Current Report on Form 8-K with the Securities and Exchange
Commission, or SEC, including an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. We expect that once the securities comprising the units begin separate trading, the ordinary shares and warrants will be quoted on the OTC Bulletin Board under the symbols “[
]” and “[
W],” respectively.
The underwriters may also purchase up to an additional 600,000 units from us, at the public offering price less the underwriting discounts and commissions, within 45 days from the date of this prospectus to cover over-allotments, if any.
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page
25
for a discussion of information that should be considered in connection with investing in our securities.
Neither the SEC nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
|
|
|
|
|
|
|
|
|
Per Unit
|
|
Total
|
|
Public offering price
|
|
$
|
8.00
|
|
|
$
|
32,000,000
|
|
|
Underwriting discounts and commissions
(1)
|
|
$
|
0.56
|
|
|
$
|
2,240,000
|
|
|
Proceeds, before expenses, to us
|
|
$
|
7.44
|
|
|
$
|
29,760,000
|
|
|
|
(1)
|
Includes $960,000, or $0.24 per unit, payable to the underwriters for deferred underwriting discounts and commissions from the funds to be placed in the trust account described below. Such funds will be released to the underwriters only upon consummation of an initial business combination, as described in this prospectus.
|
The underwriters are offering the units on a firm commitment basis. The underwriters expect to deliver the units to purchasers on or about , 2008. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, approximately $31.0 million, or approximately $7.76 per unit, will be deposited into the trust account, of which $960,000 is attributable to the deferred underwriters’ discounts and commissions, at HSBC, with Continental Stock Transfer & Trust Company as trustee.
BROADBAND CAPITAL MANAGEMENT LLC
The date of this prospectus is , 2008
i
TABLE OF CONTENTS
PROSPECTUS SUMMARY
This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the risk factors and the financial statements. Unless otherwise stated in this prospectus, references to “we,” “us” or “our company” refer to Hambrecht Asia Acquisition Corp.. Unless otherwise specified, references to “China” or “PRC” refer to the People’s Republic of China as well as the Hong Kong Special Administrative Region, or “Hong Kong SAR,” and the Macau Special Administrative Region,
or “Macau SAR”, but does not include Taiwan. All references to “RMB” or “Renminbi” are to the legal currency of China and all references to “US dollars” and “$” are to the legal currency of the United States. Discrepancies in tables included in this prospectus between totals and sums of the amounts listed are due to rounding. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option.
We are a blank check company formed under the laws of the Cayman Islands on July 18, 2007. We were formed to acquire one or more operating businesses having its primary operations in the PRC through a merger, stock exchange, asset acquisition or similar business combination, or control, through contractual arrangements (which we refer to throughout this prospectus as a business combination). We will not seek to acquire a business with its primary operations outside of the PRC. Our efforts to identify prospective target businesses will not be limited to a particular industry. To date, our efforts have been limited to organizational activities.
We do not have any specific business combination under consideration, and we have not, in any capacity, (nor has anyone on our behalf) contacted any potential target businesses for our company or had any discussions, formal or otherwise, with respect to such a transaction. We have not, in any capacity (nor have any of our agents or affiliates) been approached by, any candidates (or representative of any candidates), with respect to a possible acquisition transaction with our company. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we
engaged or retained any agent or other representative to identify or locate any such acquisition candidate.
We intend, after consummation of this offering, to focus on various industries and target businesses in the PRC that may provide significant opportunities for growth. Opportunities for market expansion have emerged for businesses with operations in China due to certain changes in the PRC’s political, economic and social policies as well as certain fundamental changes affecting the PRC and its neighboring countries. We believe that China represents both a favorable environment for making acquisitions and an attractive operating environment for a target business for several reasons, including, among other things, increased government focus within
China on privatizing assets, improving foreign trade and encouraging business and economic activity leading to China having one of the highest gross domestic product growths among major industrial countries in the world as well as strong growth in many sectors of its economy driven by emerging private enterprises. According to the National Bureau of Statistics of China, China’s Gross Domestic Product has grown from 11.0 trillion RMB in 2001 to 18.3 trillion RMB, representing a 5-year compound annual growth rate of 10.8% (China Statistical Yearbook – 2006, http://www.stats.gov.cn/tjsj/ndsj/2006/indexeh.htm, viewed October 29, 2007).
Notwithstanding these facts, there are various risks of business acquisitions in China including, among others, the risk that we may be unable to enforce our rights in China, that governments may revert back to former policies less conducive to free trade and that relations between China and countries in other regions of the world, including the United States, may deteriorate, leading to reduced trade.
John Wang (our President), Robert Eu (our Chairman and Secretary) and Stephen N. Cannon (our Chief Financial Officer), each of whom is also one of our directors, are our founders and promoters.
Our initial business combination must be with a target business whose fair market value is at least equal to 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000, or approximately $1,104,000 if the underwriters’ overallotment option is exercised in full, and taxes payable) at the time of such acquisition, although this may entail simultaneous acquisitions of several operating businesses. The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (which may include actual and potential
1
TABLE OF CONTENTS
sales, earnings, cash flow and/or book value). We anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business. We may, however, structure a business combination to acquire less than 100% of such interests or assets of the target business but will not acquire less than a controlling interest (which would be at least 51% of the voting securities of the target business). If we acquire only a controlling interest in a target business or businesses, the portion of such business that we acquire must have a fair market value equal to at least 80% of the amount in the trust account (excluding deferred
underwriting discounts and commissions and taxes payable), as described above. If we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of his business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent integration of the operations and services or products of the acquired companies in a single operating business.
In order to consummate such an acquisition, we may use the proceeds held in the trust account, issue a significant amount of our debt or equity securities to the sellers of such business and/or seek to raise additional funds through a private offering of debt or equity securities.
We intend to acquire an operating business through a stock exchange, asset acquisition or other similar business combination; however, there are a number of industries in China in which direct foreign investment is restricted (including telecommunications services, online commerce and advertising). Therefore, if our target business operates in an industry that is subject to these requirements, we may seek to acquire control of our target business through contractual arrangements with licensed companies operating in China and their owners. We may enter into a business combination in which we, our subsidiaries and/or affiliates, and the target business
and its shareholders, enter into a series of contracts that are designed to secure for us economic benefits and to assume by us the risks of losses that are substantially similar to full ownership. These contracts could, for example, result in a structure where, in exchange for our payment of the acquisition consideration, the target business would be owned 100% by Chinese residents whom we designate, and the target business would continue to hold the requisite licenses necessary to operate its business. We may also establish a new subsidiary in China which would provide technology, technical support, consulting and related services to the target business in exchange for fees, which are designed to transfer to us substantially all of the economic benefits of ownership of the target business.
We have agreed to sell to the representative of the underwriters for $100, an option to purchase up to 280,000 units at $10.00 per unit. The units issuable upon exercise of this option are identical to those offered by this prospectus. This option commences on the later of the consummation of a business combination or 180-days from the date of this prospectus and expires five years from the date of this prospectus.
Private Placement
AEX Enterprises Limited, W.R. Hambrecht + Co., LLC, the Hambrecht 1980 Revocable Trust, Shea Ventures LLC, and Marbella Capital Partners Ltd., have agreed to purchase an aggregate of 1,150,000 warrants at a price of $1.00 per warrant ($1,150,000 in the aggregate) in a private placement that will occur immediately prior to this offering. All of the warrants to be purchased in the private placement will be identical to the warrants in the units being offered by this prospectus, except that: (i) subject to certain limitations, none of such warrants will be transferable or salable until after we complete a business combination; (ii) the warrants are not
subject to redemption if held by the original holder and (iii) may be exercised on a cashless basis if held by the original holder, the founders or their permitted transferees. The $1,150,000 of proceeds from this investment will be added to the proceeds of this offering and will be held in the trust account pending our completion of an initial business combination on the terms described. The purchaser of the private placement warrants are using their own funds for the purchase of the private placement warrants and have no role with us or in this offering other than purchasing the private placement warrants. AEX Enterprises Limited is a company controlled by Elizabeth R. Hambrecht, wife of Robert Eu, one of our founders and our Chairman and Secretary, and William R. Hambrecht, Mr. Eu’s father-in-law. Elizabeth R. Hambrecht owns approximately 25% and William R. Hambrecht controls (through a trust of which he is trustee) approximately 38% of the voting shares of AEX Enterprises
Limited. W.R. Hambrecht + Co., LLC and the Hambrecht 1980
2
TABLE OF CONTENTS
Revocable Trust are entities controlled by William Hambrecht. William Hambrecht is a control person of W.R. Hambrecht + Co., LLC and is the trustee of the Hambrecht 1980 Revocable Trust, Shea Ventures LLC is controlled by Edmund H. Shea Jr. Marbella Capital Partners Ltd. is owned by John Wang, our Chief Executive Officer.
We do not believe that the sale of the warrants will result in a compensation expense because they are being sold at or above fair market value.
Our executive offices are located at 13/F Tower 2, New World Tower, 18 Queens Road Central, Hong Kong, and our telephone number at that office is 852-2801-5383.
3
TABLE OF CONTENTS
THE OFFERING
In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings.
|
|
|
4,000,000 units, each unit consisting of:
|
|
|
|
•
one ordinary share; and
|
|
Trading commencement and separation of ordinary shares and warrants:
|
|
|
|
|
|
The units will begin trading on or promptly after the date of this prospectus. Each of the ordinary shares and warrants comprising the units will begin separate trading on the 45th day after the date of this prospectus, unless Broadband determines that an earlier date is acceptable, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin.
|
|
|
|
In no event will the ordinary shares and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering. We will file the Current Report on Form 8-K promptly upon the consummation of this offering, which is anticipated to take place three business days from the date of this prospectus. If the over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the over-allotment option. We will also include in this Form 8-K, an amendment to it, or in a subsequent Form 8-K, information indicating if Broadband has allowed separate trading of the ordinary shares and warrants prior to the 45th day after the date of this prospectus.
|
Number of securities to be outstanding:
|
|
|
|
|
|
|
|
|
Prior to this Offering
(1)
|
|
After this Offering
(1)
(2)
|
|
Units
|
|
|
—
|
|
|
|
4,000,000
|
|
|
Ordinary Shares
|
|
|
1,000,000
|
|
|
|
5,000,000
|
|
|
Warrants
|
|
|
1,150,000
(3)
|
|
|
|
5,150,000
(3)
|
|
|
|
(1)
|
Does not include 150,000 shares sold to our founders that are subject to redemption by us to the extent the underwriters’ over-allotment is not exercised.
|
|
|
(2)
|
Assumes no exercise of the underwriters’ over-allotment option and, therefore, that we redeem 150,000 shares previously held by our founders.
|
|
|
(3)
|
Includes 1,150,000 private placement warrants described below.
|
4
TABLE OF CONTENTS
|
|
|
Each warrant is exercisable to purchase one ordinary share.
|
|
|
|
The warrants will become exercisable on the later of:
|
|
|
|
•
the consummation of our initial business combination with one or more target businesses; or
|
|
|
|
•
one year from the date of this prospectus, provided in each case that there is an effective registration statement covering the ordinary shares underlying the warrants in effect.
|
|
|
|
The warrants will expire at 5:00 p.m., New York time, on , 2012 or earlier upon redemption.
|
|
|
|
Once the warrants become exercisable, we may redeem the outstanding warrants (without the consent of the representative of the underwriters), including the warrants underlying the unit purchase option if the unit purchase option has been exercised and the warrants are outstanding (not including the warrants issued in the private placement if such warrants are held by the original holder, the founders, or their permitted transferees):
|
|
|
|
•
in whole but not in part;
|
|
|
|
•
at a price of $.01 per warrant;
|
|
|
|
•
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
|
|
•
if, and only if, the last sale price of our ordinary shares equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption.
|
|
Reasons for redemption limitations:
|
|
|
|
|
|
We have established the above conditions to our exercise of redemption rights to provide:
|
|
|
|
•
warrant holders with adequate notice of exercise only after the then-prevailing ordinary share price is substantially above the warrant exercise price; and
|
|
|
|
•
a sufficient differential between the then-prevailing ordinary share price and the warrant exercise price so there is a buffer to absorb the market reaction, if any, to our redemption of the warrants.
|
|
|
|
If the foregoing conditions are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date.
|
5
TABLE OF CONTENTS
|
Private placement warrants purchased through private placement:
|
|
|
|
|
|
AEX Enterprises Limited, W.R. Hambrecht + Co., LLC, the Hambrecht 1980 Revocable Trust, Shea Ventures LLC and Marbella Capital Partners Ltd. have agreed to purchase an aggregate of 1,150,000 warrants at a price of $1.00 per warrant ($1,150,000 in the aggregate) from us in a private placement that will occur immediately prior to the consummation of this offering. We refer to these warrants as the private placement warrants throughout this prospectus. The private placement warrants will be purchased separately and not in combination with ordinary shares in the form of units. In addition, the purchasers of the private placement warrants are using their own funds for the purchase of the private placement warrants and have no role with us or in this offering other than purchasing the private placement warrants.
|
|
|
|
The proceeds from the sale of the private placement warrants will be added to the proceeds from this offering to be held in the trust account pending our consummation of a business combination. If we do not complete a business combination that meets the criteria described in this prospectus, then the $1,150,000 purchase price of the private placement warrants will become part of any liquidating distribution to our public shareholders following our liquidation and dissolution and the private placement warrants will expire worthless.
|
|
|
|
The private placement warrants will be non-redeemable so long as they are held by the original holder, the founders or their permitted transferees. In addition, pursuant to the registration rights agreement, the holders of our private placement warrants and the underlying ordinary shares will be entitled to certain registration rights immediately after the consummation of our initial business combination and the warrants may be exercised on a cashless basis if held by the original holder, the founders or their permitted transferees. With those exceptions, the private placement warrants have terms and provisions that are otherwise identical to those of the warrants being sold as part of the units in this offering.
|
|
|
|
AEX Enterprises Limited, W.R. Hambrecht + Co., LLC, the Hambrecht 1980 Revocable Trust, Shea Ventures LLC and Marbella Capital Partners Ltd. have agreed, subject to certain exceptions described below, not to transfer, assign or sell any of their private placement warrants until after we consummate a business combination. However, prior to the consummation of a business combination, each of those entities will be permitted to transfer its private placement warrants by gift to an affiliate or a member of the immediate family of its officers or directors or to a trust or other entity, the beneficiary of which is one of its officers or directors or a member of the immediate family of its officers or directors; provided, however, that such
|
6
TABLE OF CONTENTS
|
|
|
permissive transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of the escrow agreement to which the warrants are subject.
|
|
Proposed OTC Bulletin Board symbols for our:
|
|
|
|
Offering and private placement warrant proceeds to be held in the trust account and amounts payable prior to trust account distribution or liquidation:
|
|
|
|
|
|
Approximately $31.0 million, or approximately $7.76 per unit (approximately $35.6 million, or approximately $7.75 per unit, if the over-allotment option is exercised in full) of the proceeds of this offering will be placed in a trust account at HSBC, pursuant to an agreement to be signed on the date of this prospectus. These proceeds include the $1,150,000 proceeds of the private placement warrants and $960,000 in deferred underwriting discounts and commissions (or $1,104,000 if the underwriters’ over-allotment option is exercised in full). We believe that the inclusion in the trust account of the purchase price of the private placement warrants and the deferred underwriting discounts and commissions is a benefit to our public shareholders because additional proceeds will be available for distribution to investors if a liquidation of our company occurs prior to our completing an initial business combination.
Other than as described below, proceeds in the trust account will not be released until the earlier of consummation of a business combination or a liquidating distribution. Prior to a business combination or our liquidation (i) interest earned on the trust account may be released to us to pay any taxes we incur, (ii) amounts may be released to redeeming shareholders voting against the extended period, as described in this prospectus and (iii) one-half of the interest earned by the trust account may be released to us from time to time (up to a maximum of $1,350,000) to fund our working capital and general corporate requirements, including the payment of expenses related to:
|
|
|
|
•
identification, investigation, selection and negotiation of an agreement with one or more target businesses, and
|
|
|
|
•
consultants and advisors who assist us in the identification, investigation, selection and negotiation of an agreement with one or more target businesses.
|
7
TABLE OF CONTENTS
|
|
|
With these exceptions in respect of the proceeds held in the trust account, expenses incurred by us while seeking a business combination may be paid prior to a business combination only from the net proceeds of this offering not held in the trust account (initially, approximately $411,585), and therefore we will rely on the interest earned on the trust account to fund our working capital. Following the consummation of this offering, one-half of the interest income on the trust account (up to a maximum of $1,350,000) may be released to us from time to time to fund our working capital and general corporate requirements. The proceeds held in the trust account may be subject to claims which would take priority over the claims of our public shareholders and, as a result, the per-share liquidation price could be less than $7.76 per share due to claims of such creditors.
|
|
|
|
There will be no fees, reimbursements or cash payments made to our officers, directors or their affiliates other than:
|
|
|
|
•
a payment of an aggregate of $7,500 per month to Hambrecht Eu Capital Management LLC, an affiliate of Robert Eu, one of our founders and our Chairman and Secretary, and Elizabeth Hambrecht, Mr. Eu’s wife, for office space, administrative services and secretarial support for a period commencing on November 15, 2007 and ending on the earlier of our consummation of a business combination or our liquidation; and
|
|
|
|
•
reimbursement of out-of-pocket expenses incident to identifying, investigating and consummating a business combination with one or more target businesses, none of which have been incurred to date.
|
|
|
|
•
Repayment of up to $290,000, plus interest, pursuant to the terms of a revolving credit line, made by Robert Eu, our Chairman and Secretary, to date covering offering expenses.
|
|
All amounts held in the trust account that are not paid to redeem ordinary shares, released to us in the form of interest income or payable to the underwriters for deferred discounts and commissions will be released to us on closing of our initial business combination:
|
|
|
|
|
|
All amounts held in the trust account that are not:
|
|
|
|
•
distributed to public shareholders who exercise redemption rights (as described below),
|
|
|
|
•
released to us as interest income (one-half of the interest earned on the trust account up to a maximum of $1,350,000),
|
8
TABLE OF CONTENTS
|
|
|
•
released to us to pay taxes, or
|
|
|
|
•
payable to the underwriters for deferred discounts and commissions, will be released to us on closing of our initial business combination.
|
|
|
|
At the time we complete an initial business combination, following our payment of amounts due to any public shareholders who exercise their redemption rights, there will be released to the underwriters from the trust account their deferred underwriting discounts and commissions that are equal to 3.0% of the gross proceeds of this offering, or $960,000 (or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full). Funds released from the trust account to us can be used to pay all or a portion of the purchase price of the business or businesses with which our initial business combination occurs. If the business combination is paid for using equity or debt securities, we may apply the cash released to us from the trust account to general corporate purposes, including for maintenance or expansion of operations of the acquired businesses, the payment of principal or interest due on
indebtedness incurred in consummating our initial business combination or to fund the acquisition of other companies or assets, or for working capital.
|
|
Shareholders must approve our initial business combination:
|
|
|
|
|
|
We are required to seek shareholder approval before effecting our initial business combination, even if the business combination would not ordinarily require shareholder approval under applicable Cayman Islands law. We will proceed with a business combination only if a majority of the ordinary shares voted by public shareholders are voted in favor of the business combination and public shareholders owning less than 30.0% of the shares sold in this offering exercise their redemption rights on a cumulative basis, including any shareholders who previously exercised their redemption rights in connection with the shareholder vote required to approve the extended period and our initial business combination. Since we are a Cayman Islands company, any proxy statement we utilize to obtain shareholder approval of the business combination will be prepared in accordance with Cayman Islands law.
|
|
|
|
If, at the end of the 18 month period, we have not entered into a letter of intent or definitive agreement, or if at the end of the 24 or 36 month period, as applicable, we have not obtained shareholder approval for an initial business combination, or at the end of the 24 month period we have not obtained shareholder approval of the extended period, we will dissolve as promptly as practicable and liquidate and release only to our public shareholders, as part of our plan of distribution, the proceeds of the trust account, including accrued interest, net of income and
|
9
TABLE OF CONTENTS
|
|
|
franchise taxes payable on such interest and net of interest income earned on the trust account previously released to us to fund our working capital and general corporate requirements.
|
|
|
|
The requirement that we seek shareholder approval before effecting our initial business combination is set forth in Article 170 of our articles of association, which requires the affirmative vote of at least 80% of the voting power of our outstanding voting securities to amend. The requirement that we seek shareholder approval before effecting our initial business combination therefore may be eliminated only by a vote of our board and the vote of at least 80% of the voting power of our outstanding voting securities. Management will not request that the board consider such a proposal to eliminate or amend this provision.
|
|
|
|
In connection with the shareholder vote required to approve the extended period and/or our initial business combination, our founders have agreed to vote their founder’s ordinary shares in the same manner as a majority of the public shareholders who vote at the special or annual meeting called for such purpose. In addition, each of our founders has agreed that if he acquires ordinary shares in or following this offering, he will vote all such acquired shares in favor of the extended period and/or our initial business combination. As a result, our founders will not be able to exercise the redemption rights (as described below) with respect to any of our shares that they may acquire prior to, in or after this offering.
|
|
|
|
If within 90 days before the expiration of the 24-month period, we seek approval from our shareholders of the extended period, or, within 90 days before the expiration of the 36-month period, we seek approval from our shareholders to consummate a business combination, the proxy statement related to such business combination will also seek shareholder approval for our board’s recommended plan of distribution in the event our shareholders do not approve the extended period or the business combination or if such business combination is not consummated for other reasons.
|
|
Conditions to consummating our initial business combination:
|
|
|
|
|
|
Our initial business combination must occur with one or more target businesses that have a fair market value of at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) at the time of such business combination. If our initial business combination involves a transaction in which we acquire less than a 100% interest in the target company, the value of that interest that we acquire will be equal to at least 80% of the balance in the trust account
|
10
TABLE OF CONTENTS
|
|
|
(excluding deferred underwriting discounts and commissions and taxes payable). In all instances, we would be the controlling shareholder of the target company. The key factors that we will rely on in determining controlling shareholder status would be our acquisition of at least 51% of the voting equity interests of the target company and control of the majority of any governing body of the target company. We will not consider any transaction that does not meet such criteria.
|
|
|
|
We intend to acquire an operating business through a stock exchange, asset acquisition or other similar business combination; however, there are a number of industries in China in which direct foreign investment is restricted (including telecommunications services, online commerce and advertising). Therefore, if our target business is an industry that is subject to these requirements we may seek to acquire control of our target business through contractual arrangements with licensed companies operating in China and their owners. We may enter into a business combination in which we, our subsidiaries and/or affiliates, and the target business and his shareholders enter into a series of contracts that are designed to secure for us economic benefits and to assume by us the risks of losses that are substantially similar to full ownership. These contracts could, for example, result in a structure where, in exchange for
our payment of the acquisition consideration, the target business would be owned 100% by Chinese residents whom we designate, and the target business would continue to hold the requisite licenses necessary to operate his business. We may also establish a new subsidiary in China which would provide technology, technical support, consulting and related services to the target business in exchange for fees, which are designed to transfer to us substantially all of the economic benefits of ownership of the target business.
|
|
|
|
We will consummate our initial business combination only if a majority of the ordinary shares voted by the public shareholders are voted in favor of our initial business combination and public shareholders owning less than 30.0% of the shares sold in this offering, on a cumulative basis, in connection with the shareholders vote to approve the extended period, if any, and our initial business combination, do not exercise their redemption rights described below. Many other blank check companies have a redemption threshold of 20%, which makes it more difficult for such companies to consummate their initial business combination. Because we permit a larger number of shareholders (up to one share less than 30.0% of our public shareholders) to exercise their redemption rights, it will be easier for us to consummate an initial business combination with a target business which shareholders may believe is not suitable for
us. Our founders have agreed that they will vote their founder’s ordinary shares
|
11
TABLE OF CONTENTS
|
|
|
in the same manner as a majority of the public shareholders and will vote any other ordinary shares that they acquire in favor of any business combination presented to our shareholders by our Board of Directors. The requirement that we not consummate our initial business combination if public shareholders owning 30.0% or more of the shares sold in this offering exercise their redemption rights described below is set forth in Article 170 of our articles of association and may only be eliminated by a vote of our board and the vote of at least 80% of the voting power of our outstanding ordinary shares. It is important to note that voting against the proposal for the extended period, if any, or our initial business combination, alone, will not result in redemption of a shareholder’s shares for a pro rata share of the trust account. Such right of redemption is only valid when a shareholder votes against the
transactions and exercises such redemption rights and, in the event of a business combination, such combination is approved and consummated. Management will not request that the board consider such a proposal to eliminate or amend this provision.
|
|
Possible extension of time to consummate a business combination to 36 months:
|
|
|
|
|
|
Unlike other blank check companies, if we have entered into a letter of intent, agreement in principle or definitive agreement within 18 months following the consummation of this offering, we may seek to extend the time period within which we must complete our business combination, to avoid being required to liquidate to 36 months, by calling a special meeting of our shareholders for the purpose of soliciting their approval for such extension.
|
|
|
|
We believe that extending the date before which we must complete our business combination to 36 months may be advisable due to the circumstances involved in the evaluation and closing of a business combination in China, including obtaining audited financial statements of potential targets that have previously kept their accounts in accordance with accounting standards not accepted in the United States, the possible need for restructuring and reorganizing corporate entities and assets (particularly with respect to PRC state-owned enterprises) and the requirements of complex Chinese regulatory filings and approvals. For example, without the possibility of extending the time to complete a business combination by an additional 12 months, if we were to enter into an agreement near the end of this 18 month period, we would have only six months in which to accomplish the necessary accounting reconciliations, complete the
restructuring of the company, satisfy U.S. and PRC regulatory requirements, secure the approval of our shareholders and provide for customary closing conditions.
|
|
|
|
If holders of 30.0% or more of the shares sold in this offering vote against the proposed extension to 36 months and
|
12
TABLE OF CONTENTS
|
|
|
elect to redeem their shares for a pro rata share of the trust account, we will not extend the date before which we must complete our business combination beyond 24 months. In such event, if we cannot complete the initial business combination within such 24 month period, we will be required to liquidate, with the amount remaining in the trust account returned to all public shareholders. Subject to the foregoing, approval of the extension to 36 months will require the affirmative vote of the majority of public shareholders who vote at the special meeting called for the purpose of approving such extension.
|
|
|
|
If we receive shareholder approval for the extended period and holders of 30.0% or more of the shares sold in this offering do not vote against the extended period and redeem in connection with the vote for the extended period, we will then have an additional 12 months in which to complete the initial business combination. We will still be required to seek shareholder approval before completing our initial business combination, even if the business combination would not ordinarily require shareholder approval under applicable law. As a result of an approval of the extension, we may be able to hold your funds in the trust account for up to three years.
|
|
|
|
A shareholder’s election to redeem his shares will only be honored if the extended period is approved. Shareholders who vote against the extended period and exercise their redemption rights will not be able to vote on the initial business combination. All other shareholders will be able to vote on the initial business combination.
|
|
|
|
If at the end of such 36 month period we have not effected a business combination, we will dissolve as promptly as practicable and liquidate the proceeds of the trust account as set forth in this prospectus.
|
|
Redemption rights for shareholders voting to reject the extended period or our initial business combination:
|
|
|
|
|
|
Public shareholders voting against the extended period or our initial business combination, as the case may be, will be entitled to cause us to redeem their ordinary shares for a pro rata share of the aggregate amount then in the trust account, before payment of deferred underwriting discounts and commissions and including interest earned on their pro rata portion of the trust account, net of income and franchise taxes payable on such interest income on the trust account balance previously released to us to fund our working capital and general corporate requirements. Voting against the proposal for the extended period, if any, or our initial business combination alone will not result in the redemption of a shareholder’s shares for a pro-rata portion of the trust account. The right of redemption is only valid when a shareholder votes against the proposal and exercises such redemption rights. Shareholders
voting against (i) the extended period will only have
|
13
TABLE OF CONTENTS
|
|
|
the right to cause us to redeem their shares if the extended period is approved and (ii) the business combination will only have the right to cause us to redeem their shares if our initial business combination is approved and completed. Public shareholders who cause us to redeem their ordinary shares for a pro rata share of the trust account will be paid their redemption price as promptly as practicable after the date of the special meeting for the extended period or upon consummation of a business combination, as the case may be, and will continue to have the right to exercise any warrants they own. This redemption could have the effect of reducing the amount distributed to us from the trust account by up to approximately $9.3 million (assuming redemption of the maximum of one share less than 30.0% of the eligible ordinary shares). We intend to structure and consummate any potential business combination in a
manner such that approximately 30.0% of our public shareholders, on a cumulative basis, could cause us to redeem their ordinary shares for a pro rata share of the aggregate amount then on deposit in the trust account, and the business combination could still be consummated. In the event that holders of more than 20% of the ordinary shares sold in this offering elect to redeem their shares, our existing shareholders have agreed to forfeit that number of shares (up to a maximum of 124,736) that will result in the number of shares owned by them prior to this offering collectively being no more than 23.81% of our outstanding ordinary shares immediately prior to the consummation of such business combination after giving effect to the redemption.
|
|
|
|
The initial per share redemption price in the event a public shareholder exercises its redemption rights in connection with voting against the extended period or against our initial business combination, is approximately $7.76 per share. Since this amount is less than the $8.00 per share purchase price (assuming that the entire purchase price of the units was allocated to the ordinary shares underlying the units) in this offering and may be lower than the market price of the ordinary shares on the date of redemption, there may be a disincentive on the part of public shareholders to exercise their redemption rights. Because shareholders who exercise their redemption rights will receive their proportionate share of deferred underwriting compensation and the underwriters will be paid the full amount of the deferred underwriting compensation at the time of closing of our initial business combination, the non-redeeming
shareholders will bear the financial effect of such payments to both the redeeming shareholders and the underwriters.
|
14
TABLE OF CONTENTS
|
|
|
Notwithstanding the foregoing, our Amended and Restated Memorandum and Articles of Association provides a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined under Section 13 of Securities and Exchange Act of 1934, as amended), will be restricted from seeking redemption rights with respect to an aggregate of more than 10% of the shares sold in this offering (but only with respect to the amount over 10% of the shares sold in this offering). Such a public shareholder would still be entitled to vote against a proposed business combination or the extended period, as applicable, with respect to all shares owned by such holder or such holder’s affiliates. We believe this restriction will discourage shareholders from accumulating large blocks of shares before the votes on either our proposed extended period or a proposed
business combination in an attempt by such holders to use their redemption right as a means to force us or our management to purchase their shares at a significant premium to the then current market price or on other undesirable terms. Absent this provision, a public shareholder holding more than 10% of the shares sold in this offering could threaten to vote against a proposed business combination or the extended period and seek redemption, regardless of the merits of the transaction, if such holder’s shares are not purchased by us or our management at a premium to the then current market price or on other undesirable terms. By limiting our shareholders’ ability to cause us to redeem only an aggregate of 10% of the shares sold in this offering per shareholder or group, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block a transaction which is favored by our other public shareholders. However, nothing in our Amended and
Restated Memorandum and Articles of Association or otherwise restricts the ability of any public shareholder from voting all of their shares against a proposed business combination or the extended period.
|
|
Dissolution and liquidation if no business combination:
|
|
|
|
|
|
Pursuant to the terms of the trust agreement by and between us and Continental Stock Transfer & Trust Company, our articles of association and applicable provisions of Cayman Islands Law, we will dissolve as promptly as practicable and liquidate and release only to our public shareholders, as part of our plan of distribution, the amount in our trust account, including (i) all accrued interest, net of income and franchise taxes payable on such interest and net of interest on the trust account balance previously released to us to fund our working capital and general corporate requirements and (ii) all deferred underwriting discounts and commissions, plus any remaining net assets, if we do not effect our initial business combination within 18 months after
|
15
TABLE OF CONTENTS
|
|
|
consummation of this offering (or within 24 (or 36 months if the extension of an additional 12 months is approved by shareholders) months from the consummation of this offering if a letter of intent, agreement in principle or definitive agreement has been executed within 18 months after consummation of this offering and the business combination has not yet been consummated within such 18 month period or by the expiration of the extended period).
|
|
|
|
We cannot provide investors with assurances of a specific timeframe for our dissolution and liquidation. Pursuant to our articles of association, upon the expiration of the 18, 24 or 36 month time period, as applicable, our purposes and powers will be limited to dissolving, liquidating and winding up. Also contained in our articles of association is the requirement that our board of directors, to the fullest extent permitted by law, consider a resolution to dissolve our company at that time. Consistent with such obligations, our board of directors will seek shareholder approval for any such plan of distribution, and our founders have agreed to vote in favor of such dissolution and liquidation. As promptly as practicable upon the later to occur of (i) the approval by our shareholders of our plan of distribution or (ii) the effective date of such approved plan of distribution, we will liquidate our trust account to
our public shareholders.
|
|
|
|
Our founders have agreed to waive their rights to participate in any liquidating distribution as part of our plan of distribution with respect to the ordinary shares acquired by them before this offering if we fail to consummate a business combination and to vote in favor of any such plan of distribution. There will be no distribution from the trust account with respect to our warrants, and all rights of our warrants will terminate on our liquidation.
|
|
|
|
We estimate that our total costs and expenses for implementing and completing our shareholder-approved dissolution and plan of distribution (if the vote were not conducted at the same time as a vote with respect to a potential business combination) will be between $75,000 and $125,000. This amount includes all costs and expenses related to filing our dissolution in the Cayman Islands, the winding up of our company, printing and mailing a proxy statement, holding a shareholders’ meeting relating to the approval by our shareholders of our dissolution and plan of distribution, legal fees and other filing fees. We believe that there should be sufficient funds available either outside of the trust account or made available to us out of the net interest earned on the trust account and released to us as working capital, to fund the $75,000 to $125,000 in costs and expenses.
|
|
|
|
In the event we seek shareholder approval for our dissolution and plan of distribution (which would only occur if
|
16
TABLE OF CONTENTS
|
|
|
we were required to dissolve after 18 or 24 months) and do not obtain such approval, we will nonetheless continue to pursue shareholder approval for our dissolution. Pursuant to the terms of our articles of association, our powers following the expiration of the permitted time periods for consummating a business combination will automatically thereafter be limited to acts and activities relating to dissolving and winding up our affairs, including liquidation. If no proxy statement seeking the approval of our shareholders for a business combination has been filed 90 days prior to (i) the date which is 24 months from the consummation of this offering if a letter of intent, agreement in principle or definitive agreement has been executed within 18 months after consummation of this offering and the business combination has not yet been consummated within such 24 month period or (ii) the extended period expiration
date, our board will, prior to such date, convene, adopt and recommend to our shareholders our dissolution and plan of distribution, and on such date file a proxy statement with the SEC seeking shareholder approval for such plan. Pursuant to the trust agreement governing such funds, the funds held in our trust account may not be distributed except upon our dissolution and, unless and until such approval is obtained from our shareholders, the funds held in our trust account will not be released (other than in connection with the funding of working capital, a redemption or a business combination as described elsewhere in this prospectus). Consequently, holders of a majority of our outstanding ordinary shares must approve our dissolution and plan of distribution in order to receive the funds held in our trust account and, other than in connection with a redemption or a business combination, the funds will not be available for any other corporate purpose.
|
|
Determination of offering amount:
|
|
|
|
|
|
The size of this offering and the amount to be held in the trust account were determined through discussions between us and the representative of the underwriters based, in part, on the representative’s judgment as to the expected receptivity to the offering by investors given current market conditions. Our management determined that the size of this offering, together with the proceeds of the private placement warrants, would provide us with the capital required to facilitate our combination with one or more viable target businesses with sufficient scale to operate as a stand-alone public entity. Factors considered in determining the size of this offering, price and terms of the units, including the ordinary shares and warrants underlying the units, include:
|
|
|
|
•
the history and prospects of companies whose principal business is the acquisition of other companies;
|
|
|
|
•
prior offerings of those companies;
|
17
TABLE OF CONTENTS
|
|
|
•
our prospects for acquiring an operating business at attractive values;
|
|
|
|
•
whether the net proceeds of this offering would be sufficient to allow us to acquire an operating business having a valuation between approximately $70 million and $150 million, assuming the need to raise additional funds, through a private offering of debt or equity securities;
|
|
|
|
•
a review of debt to equity ratios in leveraged transactions;
|
|
|
|
•
an assessment of our management and their experience in identifying operating companies;
|
|
|
|
•
general conditions of the securities markets at the time of this offering; and
|
|
|
|
•
other factors as were deemed relevant.
|
|
|
|
We believe that raising the amount described in this offering will offer us a broad range of potential target businesses possessing some or all of the characteristics we believe are important in evaluating target businesses. This belief is based on the experience of our management team and is not based on any research, analysis, evaluations, discussions or compilations of information with respect to any particular investment or any such action undertaken in connection with us and we cannot assure you that this belief is correct.
|
|
Underwriter’s Unit Purchase Option
|
|
|
|
|
|
We have agreed to sell to the representative of the underwriters for $100, an option to purchase up to 280,000 units at $10.00 per unit. The units issuable upon exercise of this option are identical to those offered by this prospectus. This option commences on the later of the consummation of a business combination or 180-days from the date of this prospectus and expires five years from the date of this prospectus.
|
|
Escrow of existing shareholder’s securities
|
|
|
|
|
|
On the date of this prospectus, all of our existing shareholders, including the purchaser of warrants in the private placement, will place the ordinary shares and warrants they owned before this offering into an escrow account maintained by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions for transfers (as described below), and the possible forfeiture of shares for cancellation by us (as described above), these securities will not be transferable during the escrow period and will not be released from escrow until (i) with respect to the shares, one year after the consummation of a business combination, and (ii) with respect to the warrants, upon consummation of a business combination. Prior to their release from escrow, the securities may only be transferred (i) by gift to an
|
18
TABLE OF CONTENTS
|
|
|
affiliate or a member of the holder’s immediate family or to a trust or other entity, the beneficiary of which is one of its officers or directors or a member of their respective immediate families, (ii) by virtue of the laws of descent and distribution upon death of any holder, or (iii) pursuant to a qualified domestic relations order; provided, however, that such transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of the escrow agreement. The ordinary shares held in the escrow account will only be released prior to this date if following a business combination we engage in a subsequent transaction resulting in all shareholders having a right to exchange their shares for cash or other consideration.
|
|
|
|
We will redeem, for no consideration, that number of shares held by our existing shareholders, up to a maximum of 150,000 shares, necessary to ensure that the number of shares they hold prior to this offering, exclusive of shares underlying the private placement warrants or any securities purchased in the aftermarket, equals 20% of the outstanding ordinary shares immediately after this offering and the exercise, if any, of the underwriters’ over-allotment option.
|
|
|
|
Our articles of association sets forth certain requirements and restrictions relating to this offering that apply to us until the consummation of a business combination. Specifically, our articles of association provides, among other things, that:
|
|
|
|
•
if we have entered into a letter of intent or definitive agreement with respect to a business combination within 18 months of the consummation of this offering, and we anticipate that we will not be able to consummate a business combination within 24 months, we can seek shareholder approval to extend the period of time to consummate a business combination by an additional 12 months. In such case, we will present such proposal to our shareholders together with the ability to exercise their redemption rights at that time. In order to approve the extended period (i) we must receive shareholder approval of a majority of our ordinary shares voted by our public shareholders and (ii) shareholders owning less than 30.0% of the ordinary shares purchased by the public shareholders in
this offering may exercise their redemption rights;
|
|
|
|
•
if the extended period is approved, public shareholders who voted against such proposal and exercised their redemption rights will receive their pro rata share of the trust account;
|
19
TABLE OF CONTENTS
|
|
|
•
prior to the consummation of our initial business combination, we shall submit such business combination to our shareholders for approval;
|
|
|
|
•
we may consummate our initial business combination if: (i) approved by a majority of the ordinary shares voted by our public shareholders, and (ii) shareholders owning less than 30.0% of the ordinary shares purchased by the public shareholders in this offering exercise their redemption rights (on a cumulative basis, including shares redeemed in connection with our seeking shareholder approval for the extended period, if applicable);
|
|
|
|
•
if our initial business combination is approved and consummated, public shareholders who voted against the business combination and exercised their redemption rights will receive their pro rata share of the trust account;
|
|
|
|
•
if a business combination is not consummated or a letter of intent, an agreement in principle or a definitive agreement is not signed within the time periods specified in this prospectus, then we will be dissolved and distribute to all of our public shareholders their pro rata share of the trust account;
|
|
|
|
•
our management will take all actions necessary to liquidate our trust account to our public shareholders as part of our plan of dissolution if a business combination is not consummated or a letter of intent, an agreement in principle or a definitive agreement is not signed within the time periods specified in this prospectus (consistent with such obligations, our directors have agreed to vote in favor of such dissolution and liquidation);
|
|
|
|
•
our shareholders’ rights to receive a portion of the trust fund are limited such that they may only receive a portion of the trust fund upon liquidation of our trust account to our public shareholders as part of our plan of distribution or upon the exercise of their redemption rights; and
|
|
|
|
•
we may not consummate any other merger, capital stock exchange, stock purchase, asset acquisition or similar transaction or control through contractual arrangements other than a business combination that meets the conditions specified in this prospectus, including the requirement that our initial business combination be with one or more operating businesses whose fair market value, either individually or collectively, is equal to at least 80% of the amount in the trust account
|
20
TABLE OF CONTENTS
|
|
|
(excluding deferred underwriting discounts and commissions and taxes payable) at the time of such business combination.
|
|
|
|
The above-referenced requirements and restrictions included in our articles of association are obligations to our shareholders and may only be amended prior to consummation of a business combination with the vote of our board of directors and the affirmative vote of at least 80% of the voting power of our outstanding ordinary shares (which restrictions on amendment Cayman Islands counsel has indicated is enforceable under Cayman Islands law). If any of these provisions are amended, our shareholders:
|
|
|
|
•
may lose the right to redeem their ordinary shares if they vote against a business combination;
|
|
|
|
•
may lose the right to prevent a business combination if 30% of our shareholders vote against the extended period or the business combination;
|
|
|
|
•
might not receive the amount anticipated in connection with a redemption or liquidation; and
|
|
|
|
•
might not receive amounts from trust in the time frames specified in this prospectus.
|
|
|
|
Our founders have agreed to vote their founders’ ordinary shares in the same manner as a majority of the public shareholders at the special meeting called for such purpose. In light of the requirement that we obtain the approval of at least 80% of the voting power of our shareholders, we do not anticipate any changes to such requirements and restrictions prior to our consummation of a business combination, if any. In connection with the shareholder vote required to approve the extended period or a business combination, our founders have agreed to vote their founder’s ordinary shares in the same manner as a majority of the public shareholders who vote at the special or annual meeting called for such purpose. In addition, each of our founders has agreed that if he acquires ordinary shares in or following this offering, he will vote all such acquired shares in favor of the extended period and/or a business
combination.
|
Risks
We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete a business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our chairman of the board, chief executive officer, chief financial officer and our other directors, but also the special risks we face as a blank check company including reliance on our ability to choose an appropriate target business and either conduct due diligence or monitor due diligence conducted by others, conflicts of interest
of Messrs. Wang, Eu and Cannon, and the control of our company exercised by Messrs. Wang, Eu
21
TABLE OF CONTENTS
and Cannon by virtue of their direct and indirect equity interests. In addition, you will experience immediate and substantial dilution from the purchase of our ordinary shares. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section entitled “Risk Factors” beginning on page
25
of this prospectus.
22
TABLE OF CONTENTS
SUMMARY FINANCIAL DATA
The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented.
|
|
|
|
|
|
|
|
|
December 31, 2007
|
|
Balance Sheet Data
|
|
Actual
|
|
As Adjusted
|
|
Working capital (deficiency)
|
|
$
|
(179,990
|
)
|
|
$
|
30,782,848
|
|
|
Total assets
|
|
|
284,924
|
|
|
|
31,454,848
|
|
|
Total liabilities
|
|
|
281,661
|
|
|
|
672,000
|
|
|
Value of ordinary shares which may be redeemed for cash ($7.76 per share)
|
|
|
—
|
|
|
|
9,311,992
|
|
|
Shareholders’ equity
|
|
$
|
3,263
|
|
|
$
|
21,470,856
|
|
The “as adjusted” information gives effect to the sale of the units we are offering including the application of the related gross proceeds, the receipt of $1,150,000 from the sale of the private placement warrants and the payment of the estimated remaining expenses of this offering. The “as adjusted” working capital and “as adjusted” total assets include $960,000 being held in the trust account representing deferred underwriting discounts and commissions.
The “as adjusted” working capital and total assets amounts include approximately $31,040,000 (not including the exercise of the over-allotment option) to be held in the trust account, which will be distributed (i) to public shareholders who vote against extending our liquidation date and exercise their redemption rights in connection with a vote on the extended period, if any, or in connection with our initial business combination (assuming that the extension period and business combination is approved, respectively), (ii) upon the consummation of a business combination to the underwriters in the amount of $960,000 in payment of their
deferred underwriting discounts and commissions and (iii) upon the consummation of a business combination to us in the amount remaining in the trust account following the payment to any public shareholders who exercise their redemption rights and payment of deferred discounts and commissions to the underwriters. All such proceeds will be distributed from the trust account only as described in this prospectus. If a business combination is not so consummated, we will dissolve and the proceeds held in the trust account, including the deferred underwriting discounts and commission and all interest thereon, net of income or franchise taxes on such interest and net of interest income on the trust account balance previously released to us to fund our working capital and general corporate requirements, will be distributed to our public shareholders as part of a plan of distribution.
We will not consummate a business combination if public shareholders owning 30.0% or more of the shares sold in this offering vote against the extended period or the business combination, on a cumulative basis, and concurrently exercise their redemption rights. Accordingly, we may effect a business combination if public shareholders owning up to 30.0% of the 4,000,000 ordinary shares sold in this offering exercise their redemption rights on a cumulative basis. If this occurred, we would be required to redeem for cash up to one share less than 30.0% of the ordinary shares sold in this offering, or 1,199,999 ordinary shares (1,379,999 if the
underwriters exercise their over-allotment option in full) at an initial per-share redemption price of approximately $7.76 (which includes $0.24 attributable to the deferred portion of the underwriter’s compensation) for approximately $9.3 million in the aggregate (approximately $10.7 in the aggregate if the underwriters exercise their over-allotment option in full). The actual per-share redemption price will be equal to the aggregate amount then on deposit in the trust account, before payment of deferred underwriting discounts and commissions and including accrued interest, net of income or franchise taxes on such interest and net of interest income on the trust account balance previously released to us as described above, as of the date of the special meeting of shareholders called for the purpose of approving the extended period, or two business days prior to the proposed consummation of the business combination, as the case may be, divided by the number of ordinary shares
included in the units sold in this offering. We intend to structure and consummate any potential business combination in a manner such that public shareholders holding up to (but not including) 30.0% of the ordinary shares sold in this offering voting against the extended period or our initial business combination could cause us to redeem their ordinary shares for a pro rata share of the aggregate amount then on deposit in the trust account, and the business combination could still be consummated.
23
TABLE OF CONTENTS
In the event that holders of more than 20% of the ordinary shares sold in this offering elect to redeem their shares, our existing shareholders have agreed to forfeit that number of shares (up to a maximum of 124,736) that will result in the number of shares owned by them prior to this offering collectively being no more than 23.81% of our outstanding ordinary shares immediately prior to the consummation of such business combination after giving effect to the redemption.
24
TABLE OF CONTENTS
RISK FACTORS
An investment in our securities involves a high degree of risk. You should consider carefully all of the material risks described below, together with the other information contained in this prospectus before making a decision to invest in our units. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
We are a newly formed, development stage company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. These factors, among others, indicate that we may be unable to continue operations as a going concern.
We are a recently formed development stage company with no operating results, and we will not commence operations until obtaining funding through this offering. Because we lack an operating history, you have no basis on which to evaluate our ability to achieve our business objective of completing a business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective target businesses concerning a business combination and may be unable to complete a business combination. We will not generate any revenues from operations until after completing a business combination. If we expend all of the
approximately $411,585 in proceeds from this offering not held in the trust account and one-half of the interest income earned (net of income and franchise taxes on such interest) on the balance of the trust account (up to $1,350,000) that may be released to us to fund our working capital and general corporate requirements in seeking a business combination but fail to complete such a combination, we will never generate any operating revenues. These factors, among others, indicate that we may be unable to continue operations as a going concern.
We may not be able to consummate a business combination within the required time frame, in which case, we would dissolve and liquidate our assets.
Pursuant to our articles of association we must complete a business combination with a fair market value of at least 80% of the balance of the trust account at the time of the business combination (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) within 18 months after the consummation of this offering (or within 24 months after the consummation of this offering if a letter of intent, agreement in principle or a definitive agreement has been executed within 18 months after the consummation of this offering and the
business combination relating thereto has not yet been consummated within such 18-month period, or, if extended pursuant to a shareholder vote as described beginning on page
70
of this prospectus, within 36 months from the consummation of this offering). If we fail to consummate a business combination within the required time frame, we will, in accordance with our articles of association dissolve, liquidate and wind up. The foregoing requirements are set forth in Article 170 of our articles of association and may not be eliminated without the vote of our board and the vote of at least 80% of the voting power of our outstanding ordinary shares. We may not be able to find suitable target businesses within the required time frame. In addition, our negotiating position and our ability to conduct adequate due diligence on any potential target may be reduced as we approach the deadline for the consummation of a business combination. We do not have any specific business
combination under consideration, and neither we, nor any representative acting on our behalf, has had any contacts with any target businesses regarding a business combination, nor taken any direct or indirect actions to locate or search for a target business.
Unlike other blank check companies, we are permitted, pursuant to our articles of association, to seek to extend the date before which we must complete an initial business combination to 36 months. As a result, your funds may be held in the trust account for up to three years.
Unlike other blank check companies, if we have entered into a letter of intent, agreement in principle or definitive agreement within 18 months following the consummation of this offering, we may seek to extend the date before which we must complete our business combination, to avoid being required to liquidate, beyond the more typical 24 months to 36 months by calling a special meeting of our shareholders for the purpose of soliciting their approval for such extension. We believe that an extension could be necessary due to the circumstances involved in the evaluation and closing of a business combination in China, including obtaining audited
financial statements of potential targets that have previously kept their accounts in accordance with
25
TABLE OF CONTENTS
an accounting standard not accepted in the United States, the possible need for restructuring and reorganizing corporate entities and assets (particularly with respect to PRC state-owned enterprises) and the requirements of complex Chinese regulatory filings and approvals. Without the option of extending to 36 months, if we enter into such agreement near the end of the initial 18 month period, we would have only six months in which to accomplish the necessary accounting reconciliations, satisfy U.S. and PRC regulatory requirements, secure the approval of our shareholders and provide for customary closing conditions. If the proposal for the extension
to 36 months is approved by our shareholders as described beginning on page 70 of this prospectus, we will have an additional 12 months beyond the more usual 24 month period with which to complete our initial business combination. As a result we may be able to hold your funds in the trust account for up to three years and thus delay the receipt by you of your funds from the trust account on redemption or liquidation.
Under Cayman Islands law, the requirements and restrictions relating to this offering contained in our articles of association may be amended, which could reduce or eliminate the protection afforded to our shareholders by such requirements and restrictions.
Our articles of association set forth certain requirements and restrictions relating to this offering that shall apply to us until the consummation of a business combination. Specifically, our articles of association provides among other things, that:
|
|
•
|
if we have entered into a letter of intent or definitive agreement with respect to a business combination within 18 months of the consummation of this offering, and we anticipate that we will not be able to consummate a business combination within 24 months, we can seek shareholder approval to extend the period of time to consummate a business combination by an additional 12 months. In such case, we will present such proposal to our shareholders. In order to approve the extended period, we must receive shareholder approval of a majority of our ordinary shares voted by our public shareholders and shareholders owning up to one share less than 30.0% of the ordinary shares purchased by the public shareholders in this offering exercise their redemption rights;
|
|
|
•
|
if the extended period is approved, public shareholders who voted against such proposal and exercised their redemption rights will receive their pro rata share of the trust account;
|
|
|
•
|
prior to the consummation of our initial business combination, we shall submit our initial business combination to our shareholders for approval;
|
|
|
•
|
we may consummate our initial business combination if: (i) approved by a majority of the ordinary shares voted by our public shareholders, and (ii) shareholders owning less than 30.0% of the ordinary shares purchased by the public shareholders in this offering exercise their redemption rights (on a cumulative basis, including shares redeemed in connection with our seeking shareholder approval for the extended period, if applicable);
|
|
|
•
|
if our initial business combination is approved and consummated, public shareholders who voted against the business combination and exercised their redemption rights will receive their pro rata share of the trust account;
|
|
|
•
|
if a business combination is not consummated or a letter of intent, an agreement in principle or a definitive agreement is not signed within the time periods specified in this prospectus, then we will be dissolved and distribute to all of our public shareholders their pro rata share of the trust account; and
|
|
|
•
|
our management will take all actions necessary to liquidate our trust account to our public shareholders as part of our plan of distribution if a business combination is not consummated or a letter of intent, an agreement in principle or a definitive agreement is not signed within the time periods specified in this prospectus;
|
|
|
•
|
our shareholders’ rights to receive a portion of the trust fund are limited such that they may only receive a portion of the trust fund upon liquidation of our trust account to our public shareholders as part of our plan of distribution or upon the exercise of their redemption rights; and
|
26
TABLE OF CONTENTS
|
|
•
|
we may not consummate any other merger, capital stock exchange, stock purchase, asset acquisition or similar transaction or control through contractual arrangements other than a business combination that meets the conditions specified in this prospectus, including the requirement that our initial business combination be with one or more operating businesses whose fair market value, either individually or collectively, is equal to at least 80% of the amount in the trust account (excluding deferred underwriting discounts and commissions and taxes payable) at the time of such business combination.
|
The foregoing provisions may be amended by a vote of our board and the vote of at least 80% of the voting power of our outstanding ordinary shares. If any of these provisions are amended, our shareholders:
|
|
•
|
may lose the right to redeem their ordinary shares if they vote against a business combination;
|
|
|
•
|
may lose the right to prevent a business combination if 30% of our shareholders vote against the extended period or the business combination;
|
|
|
•
|
might not receive the amount anticipated in connection with a redemption or liquidation; or
|
|
|
•
|
might not receive amounts from trust in the time frames specified in this prospectus.
|
If we were to become a foreign private issuer, we would not be subject to certain SEC regulations that companies incorporated in the United States would be subject to.
If we were to become a “foreign private issuer” within the meaning of the rules promulgated under the Securities Exchange Act of 1934, we would be exempt from certain provisions applicable to United States public companies including:
|
|
•
|
The sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered under the Exchange Act;
|
|
|
•
|
Provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and
|
|
|
•
|
The sections of the Securities Exchange Act requiring our insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profits realized from any“short swing” trading transactions (i.e., a purchase and sale, or a sale and purchase, of the issuer's equity securities within less than six months).
|
Because of these exemptions, our shareholders will not be afforded the same protections or information generally available to investors holding shares in public companies organized in the United States. In particular, if we were to become a foreign private issuer we would be exempt from the rules under the Securities Exchange Act relating to proxy statements and, at the time we sought approval from our shareholders of our initial business combination, we would not expect to file preliminary proxy solicitation materials regarding our business combination with the SEC. Instead, we would prepare and mail proxy solicitation materials in accordance with
Cayman Islands law and, as required, file such materials with the SEC after mailing. Although we anticipate that our proxy materials would contain many of the same disclosures as proxy materials prepared in conformance with the SEC’s proxy rules, our proxy materials would not have been reviewed by the SEC and might not contain all of the disclosures required under such rules.
If we dissolve and liquidate before concluding a business combination, our public shareholders will receive less than $8.00 per share on distribution of trust account funds and our warrants will expire worthless.
If we are unable to complete a business combination and must dissolve and liquidate our assets, the per-share liquidating distribution will be less than $8.00 because of the expenses of this offering, our general and administrative expenses and the planned costs of seeking a business combination. If we were unable to conclude an initial business combination and expended all of the net proceeds of this offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, net of income and franchise taxes payable on such interest and net of interest income on the trust account
balance previously released to us to fund working capital requirements, the initial per-share liquidation price would be $7.76, or $0.24 less than the per-share offering price of $8.00 (assuming that the entire
27
TABLE OF CONTENTS
offering amount was allocated to the shares included in the units). Furthermore, our outstanding warrants are not entitled to participate in a liquidating distribution and the warrants will therefore expire worthless if we dissolve and liquidate before completing a business combination.
You will not receive protections normally afforded to investors in blank check companies.
Since the net proceeds of this offering are designated for completing a business combination with a target business that has not been identified, we may be deemed a “blank check” company under the United States securities laws. However, since we will have net tangible assets in excess of $5.0 million and will at that time file a Current Report on Form 8-K with the SEC that includes an audited balance sheet demonstrating this fact, we are exempt from SEC rules such as Rule 419 that are designed to protect investors in blank check companies. Accordingly, investors in this offering will not receive the benefits or protections of that rule.
Among other things, this means our units will be immediately tradable and we will have a longer period of time to complete a business combination in some circumstances than do companies subject to Rule 419.
We intend to have our securities quoted on the OTC Bulletin Board, which will limit the liquidity and price of our securities more than if our securities were quoted or listed on The Nasdaq Stock Market or a national exchange.
Our securities will be traded in the over-the-counter market. It is anticipated that they will be quoted on the OTC Bulletin Board, a FINRA-sponsored and operated inter-dealer automated quotation system for equity securities not included on The Nasdaq Stock Market. Quotation of our securities on the OTC Bulletin Board will limit the liquidity and price of our securities more than if our securities were quoted or listed on The Nasdaq Stock Market or a national exchange.
If third parties bring claims against us, the proceeds held in the trust account may be reduced and the per share liquidation price received by you will be less than $7.76 per share.
Our placing of funds in the trust account may not protect those funds from third party claims against us. Although we will seek to have all vendors that we engage after the consummation of this offering, prospective target businesses or other entities we engage execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements, or if executed, that this will prevent potential contracted parties from making claims against the trust account. Nor is there any guarantee that such entities will agree to waive any claims they may have
in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Accordingly, the proceeds held in the trust account may be subject to claims which would take priority over the claims of our public shareholders and, as a result, the per-share liquidation price could be less than $7.76 due to claims of such creditors. If we are unable to complete a business combination and are forced to dissolve and liquidate, each of John Wang, Robert Eu, and Stephen N. Cannon will, by agreement, agree to indemnify us (each in an amount proportional to the number of shares owned as compared to all of them as a group) for all claims of vendors, potential target businesses or other persons, to the extent we fail to obtain valid and enforceable waivers from such parties.
Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the funds held in our trust account will be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to claims of third parties with priority over the claims of our public shareholders. To the extent bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public shareholders the liquidation amounts due them.
Public shareholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group”, will be restricted from exercising redemption rights with respect to more than an aggregate of 10% of the shares sold in this offering.
When we seek shareholder approval of any business combination or the extended period, we will offer each public shareholder (but not our existing shareholders) the right to cause us to have his, her or its ordinary shares redeemed for cash if the shareholder votes against the business combination or the extended period, as applicable, elects redemption of his, her or its ordinary shares and, in the case of a vote on a business combination, the business combination is approved and completed, or in the case of a vote on the extended period, the extended period is approved. Notwithstanding the foregoing, our Amended and Restated
28
TABLE OF CONTENTS
Memorandum and Articles of Association provides that a public shareholder, together with any affiliate or any other person with whom such holder is acting in concert or as a “group” (as defined under Section 13 of Securities and Exchange Act of 1934, as amended) will be restricted from exercising redemption rights with respect to more than an aggregate of 10% of the shares sold in this offering. Accordingly, if you purchase more than 10% of the shares sold in this offering and a proposed business combination or the extended period is approved, you will not be able to seek redemption rights with respect to the full amount of your shares and
may be forced to hold such additional shares or sell them in the open market.
We will dissolve and liquidate if we do not consummate a business combination, in which case our public shareholders will receive less than $8.00 per share on distribution.
Pursuant to our articles of association, among other things, we must complete a business combination within 18 months after the consummation of this offering (or within 24 months after the consummation of this offering if a letter of intent, agreement in principle or a definitive agreement has been executed within 18 months after the consummation of this offering and the business combination relating thereto has not yet been consummated within such 18-month period or by the expiration of the extended period). If we do not comply with this requirement, we will dissolve. The foregoing requirement is set forth in Article 170 of our articles of
association and may not be eliminated without the vote of our board and the vote of at least 80% of the voting power of our outstanding voting ordinary shares. Upon dissolution, we will distribute to all of our public shareholders, in proportion to their respective equity interest, an aggregate sum equal to the amount in the trust account (net of income and franchise taxes payable and that portion of the interest earned previously released to us) and net assets held outside the trust account. Our founders have waived their rights to participate in any liquidating distribution with respect to their founders’ ordinary shares and has agreed to vote in favor of any dissolution and plan of distribution which we will present to our shareholders for vote. There will be no distribution from the trust account with respect to our warrants which will expire worthless. We will pay the costs of our dissolution and liquidation of the trust account from our remaining assets outside of the trust
account, and we estimate such costs to be between $75,000 and $125,000, if not done in connection with a shareholder vote with respect to a potential business combination. Upon notice from us, the trustee of the trust account will liquidate the investments constituting the trust account and will turn over the proceeds to our transfer agent for distribution to our public shareholders as part of our shareholder-approved dissolution and plan of distribution. Concurrently, we shall pay, or reserve for payment, from interest released to us from the trust account if available, our liabilities and obligations, although we cannot give you assurances that there will be sufficient funds outside the trust account for such purpose. The amounts held in the trust account may be subject to claims by third parties, such as vendors, prospective target business or other entities, if we do not obtain waivers in advance from such third parties prior to such parties providing us with services or entering
into arrangements with them. We have not received any waiver agreements at this time and we cannot assure you that such waivers will be obtained or will be enforceable. Accordingly, upon dissolution and liquidation, the estimated per-share liquidating distribution will be $7.76, which is less than $8.00 per share because of the expenses of this offering, our general and administrative expenses and the planned costs of seeking a business combination.
Unlike many other blank check offerings, we allow up to approximately 30.0% of our public shareholders, on a cumulative basis, to exercise their redemption rights. This higher threshold will make it easier for us to consummate a business combination with which you may not agree and could result in more money from trust being used to pay for redemptions than in other blank check offerings.
When we seek shareholder approval for the extended period and our initial business combination, we will offer each public shareholder (other than our existing shareholders) the right to have his, her or its ordinary shares converted to cash if the shareholder votes against the extended period or business combination, as the case may be, and each such proposal is approved and, in the case of the business combination, it is also consummated. We will consummate the initial business combination only if the following two conditions are met: (i) a majority of the ordinary shares voted by the public shareholders are voted in favor of the business
combination and (ii) public shareholders owning 30.0% or more of the shares sold in this offering do not vote against the business combination and exercise their redemption rights (on a cumulative basis, including any shares previously redeemed in connection with the extended period). Many other blank check companies have a redemption threshold of 20.0%, which makes it more difficult for such companies to consummate their initial business combination. Thus, because we permit a larger number of shareholders to exercise their
29
TABLE OF CONTENTS
redemption rights, it will be easier for us to consummate an initial business combination with a target business which shareholders may believe is not suitable for us, and you may not receive the full amount of your original investment upon exercise of your redemption rights. We have increased the redemption percentage to 30.0% from the more typical 20% in order to reduce the likelihood that a small group of investors holding a large block of our ordinary shares will be able to stop us from completing a business combination that is otherwise approved by a large majority of our public shareholders and to be competitive with other offerings by blank
check companies currently in the market. Additionally, because we permit a larger number of shareholders to exercise their redemption rights, we could pay redeeming shareholders an aggregate of 10% more of our trust fund than other blank check offerings, which may result in our having to obtain additional financing to consummate the business combination or result in less money being available for use as working capital post business combination.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are a company incorporated under the laws of the Cayman Islands, and certain of our assets may in the future be located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States in a way that will permit a US court to have jurisdiction over us.
Our corporate affairs will be governed by our memorandum and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of
persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
The Cayman Islands courts are also unlikely:
|
|
•
|
to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and
|
|
|
•
|
to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.
|
There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. The Grand Court of the Cayman Islands may stay proceedings if concurrent proceedings are being brought elsewhere.
Since we have not yet selected a particular industry or any target business with which to complete a business combination, you will be unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.
We intend to consummate a business combination with a company in the PRC in any industry we choose, that we believe will provide significant opportunities for growth, and we are not limited to any particular industry or type of business. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business or businesses with which we may ultimately enter a business combination. Although we will evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risks
present in that target business. Even if we properly assess those risks, some of them may be outside of
30
TABLE OF CONTENTS
our control or ability to affect. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a target business.
Your only opportunity to evaluate and affect the investment decision regarding a potential business combination will be limited to voting for or against the business combination submitted to our shareholders for approval.
You will be relying on the ability of our officers and members of our board, with the assistance of employees, advisors and consultants, to choose a suitable business combination. At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Accordingly, your only opportunity to evaluate and affect the investment decision regarding a potential business combination will be limited to voting for or against the business combination submitted to our shareholders for approval. In addition, a proposal that you vote against could still be approved if a sufficient
number of public shareholders vote for the proposed business combination. Alternatively, a proposal that you vote for could still be rejected if a sufficient number of public shareholders vote against the proposed business combination.
We will not be required to obtain a fairness opinion from an independent investment banking firm as to the fair market value of the target business unless our Board of Directors is unable to independently determine the fair market value.
The fair market value of a target business or businesses will be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential sales, the values of comparable businesses, earnings and cash flow, and book value. If our board is not able to independently determine that the target business has a sufficient fair market value to meet the threshold criterion, or if we acquire control through contractual arrangements, we will obtain an opinion from an unaffiliated, independent investment banking firm which is a member of FINRA with respect to the satisfaction of such criterion. In all
other instances, we will have no obligation to obtain or provide you with a fairness opinion. Without a fairness opinion, no independent third party will have reviewed the fairness of the potential business combination from a financial point of view, and shareholders would not have the benefit of that analysis in their review of the transaction.
If we issue capital securities or redeemable debt securities to complete a business combination, your equity interest in us could be reduced or there may be a change in control of our company.
Our articles of association authorizes the issuance of up to 50,000,000 ordinary shares, par value $0.001 per share, and 1,000,000 shares of preferred shares, par value $0.001 per share. Immediately after this offering (assuming no exercise of the underwriters’ over-allotment option), there will be 39,290,000 authorized but unissued ordinary shares available for issuance (after appropriate reservation for the issuance of shares upon full exercise of our outstanding derivative securities, including the private placement warrants and the unit purchase option) and all of the preferred shares available for issuance. We have no other commitments as
of the date of this offering to issue any additional securities. We may issue a substantial number of additional ordinary shares or preferred shares, or a combination of both, including through redeemable debt securities, to complete a business combination, particularly as we intend to focus primarily on acquisitions of mid-cap companies with valuations between approximately $70 million and $150 million. Our issuance of additional ordinary shares or any preferred shares:
|
|
•
|
may significantly reduce your equity interest in us;
|
|
|
•
|
may cause a change in control if a substantial number of our ordinary shares are issued, which may among other things limit our ability to use any net operating loss carry forwards we have, and result in the resignation of our officers and directors;
|
|
|
•
|
may, in certain circumstances, have the effect of delaying or preventing a change in control of us; and
|
|
|
•
|
may adversely affect the then-prevailing market price for our ordinary shares.
|
The value of your investment in us may decline if any of these events occur.
31
TABLE OF CONTENTS
If we acquire a company by issuing debt securities, our post-combination operating results may decline due to increased interest expense or our liquidity may be adversely affected by an acceleration of our indebtedness.
We may elect to enter into a business combination that requires us to issue debt securities as part of the purchase price for a target business, particularly as we intend to focus primarily on acquisitions of mid-cap companies with valuations between approximately $70 million and $150 million. If we issue debt securities, such issuances may result in:
|
|
•
|
default and foreclosure on our assets if our operating cash flow after a business combination were insufficient to pay our debt obligations;
|
|
|
•
|
acceleration, even if we are then current in our debt service obligations, if the debt securities have covenants that require us to meet certain financial ratios or maintain designated reserves, and any such covenants are breached without a waiver or renegotiation;
|
|
|
•
|
a required immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and
|
|
|
•
|
our inability to obtain additional financing, if necessary, if the debt securities contain covenants restricting our ability to obtain additional financing.
|
Certain of our officers and directors may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us and accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
Certain of our officers and directors may in the future become affiliated with entities including other “blank check” companies, engaged in business activities similar to those intended to be conducted by us. Each of Messrs. Eu, Cannon and Ting are executives at W.R. Hambrecht + Co., LLC an investment banking firm that engages in underwriting and advisory services for companies, including other blank check companies similar to ours. W.R. Hambrecht + Co., LLC is anticipated to be an underwriter or advisor for a blank check company that, like us, was formed to acquire an operating business in the PRC. Furthermore, each of our principals may
become involved with subsequent blank check companies similar to our company. Additionally, our officers and directors may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe fiduciary duties. Accordingly, they may have conflicts of interest in determining to which entity time should be allocated or a particular business opportunity should be presented. We cannot assure you that these conflicts will be resolved in our favor. As a result, a potential target business may be presented to another entity with which our officers and directors have a fiduciary obligation pre-existing the fiduciary obligation they owe to us and we may miss out on a potential transaction.
Our founders, John Wang, Robert Eu and Stephen N. Cannon currently control us and may influence certain actions requiring a shareholder vote.
Assuming none of our founders purchases units in this offering or in the open market, they will beneficially own, in the aggregate, 20% of our issued and outstanding ordinary shares when this offering is completed. Other than as described in this prospectus, none of our founders has indicated to us that they intend to purchase units in this offering. Our founders have agreed that any ordinary shares they acquire in or after this offering will be voted in favor of a business combination that is presented to our public shareholders. Accordingly, ordinary shares acquired by our founders in or after this offering will not have the same voting or
redemption rights as our public shareholders with respect to a potential business combination, and our founders will not be eligible to exercise redemption rights for those shares if a business combination is approved by a majority of our public shareholders.
Because AEX Enterprises Limited, WR Hambrecht + Co., LLC and the Hambrecht 1980 Revocable Trust, companies controlled by Elizabeth R. Hambrecht, wife of Robert Eu, one of our founders and our Chairman and Secretary, and William R. Hambrecht, Robert Eu’s father-in-law, Shea Ventures LLC, a company controlled by Edmund H. Shea Jr. and Marbella Capital Partners Ltd., a company controlled by John Wang, our Chief Executive Officer, will hold, in the aggregate, warrants to purchase 1,150,000 ordinary shares that they purchased in the private placement, after a business combination, the exercise of those warrants may
32
TABLE OF CONTENTS
indirectly increase the ownership of Robert Eu and John Wang. This increase could allow our Mr. Eu and/or Mr. Wang to influence the outcome of matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions after consummation of our initial business combination. In addition, neither our founders nor their affiliates are prohibited from purchasing units in this offering or our ordinary shares in the aftermarket. If they do so, our founders will have a greater influence on the vote taken in connection with a business combination.
Resources could be wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
It is anticipated that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate the business combination for any number of reasons including those beyond
our control such as that more than 29.99% of our public shareholders vote against extending the period of time that we have to consummate a business combination and/or the business combination and opt to have us redeem their ordinary shares for a pro rata share of the trust account even if a majority of our shareholders approve the business combination. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
Each of our founders may have a conflict of interest in deciding if a particular target business is a good candidate for a business combination.
Our founders have agreed to waive their right to receive distributions with respect to their founders’ ordinary shares purchased by them before this offering if we dissolve and liquidate because we fail to complete a business combination. AEX Enterprises Limited, W.R. Hambrecht + Co., LLC and the Hambrecht 1980 Revocable Trust, companies controlled by Elizabeth R. Hambrecht, the wife of Robert Eu, our founder and Chairman and Secretary, and William R. Hambrecht, Robert Eu father-in-law, Shea Ventures LLC, a company controlled by Edmund H. Shea Jr. and Marbella Capital Partners Ltd., a company controlled by John Wang, our Chief Executive Officer,
will purchase an aggregate of 1,150,000 private placement warrants immediately prior to the consummation of this offering. The $1,150,000 purchase price of the private placement warrants will be included in the trust account that is distributed to our public shareholders in the event of our dissolution and liquidation. Our directors’ and officer’s desire to avoid rendering their ordinary shares and warrants worthless may result in a conflict of interest when they determine whether the terms, conditions and timing of a particular business combination are appropriate and in our shareholders’ best interest.
Unless we complete a business combination, our other directors will not receive reimbursement for any out-of-pocket expenses they incur if such expenses exceed the amount available to us for working capital and general corporate purposes. Therefore, they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination and in the public shareholders’ best interest.
Our directors will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount not required to be retained in the trust account unless the business combination is consummated. Our directors may, as part of any such combination, negotiate the repayment of some or all of any such expenses. If the target business’ owners do not agree to such repayment, this could cause our management to view such potential business combination unfavorably, thereby resulting in a conflict of interest. The financial interest of our directors could influence their motivation in selecting a target
business and thus, there may be a conflict of interest when determining whether a particular business combination is in the shareholders’ best interest.
33
TABLE OF CONTENTS
Our directors may not be considered “independent” under the policies of the North American Securities Administrators Association, Inc. and, therefore, may take actions or incur expenses that are not deemed to be independently approved or independently determined to be in our best interest.
Under the policies of the North American Securities Administrators Association, Inc., an international organization devoted to investor protection, because all of our directors may receive reimbursement for out-of-pocket expenses incurred by them in connection with activities on our behalf such as attending meetings of the Board of Directors, identifying potential target businesses, and performing due diligence on suitable business combinations, and certain of our directors indirectly own shares of our securities, state securities administrators could take the position that such individuals are not “independent.” If this were the case, they
would take the position that we would not have the benefit of independent directors examining the propriety of expenses incurred on our behalf and subject to reimbursement. There is no limit on the amount of out-of-pocket expenses that could be incurred and there will be no review of the reasonableness of the expenses by anyone other than our Board of Directors, which would include persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. To the extent such out-of-pocket expenses exceed the available proceeds not deposited in the trust account, such out-of-pocket expenses would not be reimbursed by us unless we complete a business combination. Although we believe that all actions taken by our directors on our behalf will be in our best interests, whether or not they are deemed to be “independent,” we cannot assure you that this will actually be the case. If actions are taken, or expenses are incurred that actually are not in
our best interests, it could have a material adverse effect on our business and operations and the price of our ordinary shares held by the public shareholders.
We will probably complete only one business combination with the proceeds of this offering, meaning our operations will depend on a single business that is likely to operate in a non-diverse industry or segment of an industry.
The net proceeds from this offering and the offering of the private placement warrants will provide us with approximately $30.1 million (approximately $34.5 million if the underwriters’ over-allotment option is exercised in full) that we may use to complete a business combination. Our initial business combination must be with a target business or businesses with a fair market value of at least 80% of the balance in the trust account at the time of such business combination (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and
taxes payable). We may not be able to acquire more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. Additionally, we may encounter numerous logistical issues if we pursue multiple target businesses, including the difficulty of coordinating the timing of negotiations, proxy statement disclosure and closings. We may also be exposed to the risk that our inability to satisfy conditions to closing with one or more target businesses would reduce the fair market value of the remaining target businesses in the combination below the required threshold of 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or $1,104,000 if the underwriters’
over-allotment option is exercised in full and taxes payable). Due to these added risks, we are more likely to choose a single target business with which to pursue a business combination than multiple target businesses. Unless we combine with a target business in a transaction in which the purchase price consists substantially of ordinary shares and/or preferred shares, it is likely we will complete only our initial business combination with the proceeds of this offering. Accordingly, the prospects for our success may depend solely on the performance of a single business. If this occurs, our operations will be highly concentrated and we will be exposed to higher risk than other entities that have the resources to complete several business combinations, or that operate in, diversified industries or industry segments.
If we do not conduct an adequate due diligence investigation of a target business with which we combine, we may be required to subsequently take write-downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.
In order to meet our disclosure and financial reporting obligations under the federal securities laws, and in order to develop and seek to execute strategic plans for how we can increase the revenues and/or profitability of a target business, realize operating synergies or capitalize on market opportunities, we must conduct a
34
TABLE OF CONTENTS
due diligence investigation of one or more target businesses. Intensive due diligence is time consuming and expensive due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that may be present inside a particular target business, or that factors outside of the target business and outside of our control will not later arise. If our diligence fails to identify issues specific to a target business, industry or the environment in which
the target business operates, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our ordinary shares. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing.
We will depend on the limited funds available outside of the trust account and a portion of the interest earned on the trust account balance to fund our search for a target business or businesses and to complete our initial business combination.
Of the net proceeds of this offering, approximately $411,585 will be available to us initially outside the trust account to fund our working capital and general corporate requirements. We will depend on sufficient interest being earned on the proceeds held in the trust account to provide us with the additional working capital we will need to identify one or more target businesses and to complete our initial business combination. While we are entitled to have released to us for such purposes one-half of the interest income, net of income and franchise taxes on such interest, up to a maximum of $1,350,000, a substantial decline in interest rates may
result in our having insufficient funds available with which to structure, negotiate or close an initial business combination. In such event, we would need to borrow additional funds from our founders, or our directors to operate or we may dissolve and liquidate.
We may be unable to obtain additional financing if necessary to complete a business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
We may consider a business combination that will require additional financing, particularly as we intend to primarily focus on acquisitions of mid-cap companies with valuations between approximately $70 million and $150 million. However, we cannot assure you that we will be able to complete a business combination or that we will have sufficient capital with which to complete a combination with a particular target business. If the net proceeds of this offering are not sufficient to facilitate a particular business combination because:
|
|
•
|
of the size of the target business;
|
|
|
•
|
of the depletion of offering proceeds not in the trust account or available to us from interest earned on the trust account balance that is expended in search of a target business; or
|
|
|
•
|
we must redeem for cash a significant number of ordinary shares owned by shareholders who elect to exercise their redemption rights,
|
we will be required to seek additional financing. We cannot assure you that such financing would be available on acceptable terms, if at all. If additional financing is unavailable to consummate a particular business combination, we would be compelled to restructure or abandon the combination and seek an alternative target business. Even if we do not need additional financing to consummate a business combination, we may require such financing to operate or grow the target business. If we fail to secure such financing, this failure could have a material adverse effect on the operations or growth of the target business. None of our directors nor any
other party is required to provide any financing to us in connection with, or following, a business combination.
Our founders paid approximately $0.022 per ordinary share and, accordingly, you will experience immediate and substantial dilution from the purchase of our ordinary shares.
Our founders (consisting of all of our officers) purchased 1,150,000 of our ordinary shares (150,000 of which will be redeemed by us in the event that the underwriters do not exercise their over-allotment option) for $25,000 (or $0.022 per share). The difference between the public offering price per share of our ordinary
35
TABLE OF CONTENTS
shares (allocating all of the unit purchase price to the ordinary shares and none to the warrant included in the unit) and the pro forma net tangible book value per share of our ordinary shares after this offering constitutes the dilution to you and other investors in this offering. The fact that our founders acquired their founders’ ordinary shares at a nominal price significantly contributed to this dilution. Assuming this offering is completed and no value is ascribed to the warrants included in the units, you and the other new investors will incur an immediate and substantial dilution of approximately 28.0% or $2.24 per share (the difference
between the pro forma net tangible book value per share after this offering of $5.76, and the initial offering price of $8.00 per unit).
Our outstanding convertible securities may adversely affect the market price of our ordinary shares and make it more difficult to effect a business combination.
The units being sold in this offering include warrants to purchase 4,000,000 ordinary shares (or 4,600,000 ordinary shares if the over-allotment option is exercised in full). We will also issue to the underwriters a unit purchase option exercisable for 280,000 units. We also have sold, in a private placement, warrants to AEX Enterprises Limited, W.R. Hambrecht + Co., LLC and the Hambrecht 1980 Revocable Trust, companies controlled by Elizabeth R. Hambrecht, wife of Robert Eu, one of our founders and our Chairman and Secretary, and William R. Hambrecht, Mr. Eu’s father-in-law, Shea Ventures LLC, a company controlled by Edmund H. Shea Jr. and
Marbella Capital Partners Ltd., a company controlled by John Wang, our Chief Executive Officer, to purchase an aggregate of 1,150,000 ordinary shares. The warrants sold in the private placement are identical to those warrants sold as part of the units in this offering except that the private placement warrants will be non-redeemable so long as they are held by the original holders, our founders or their permitted transferees, and may be exercised on a cashless basis as long as they are held by the original holders, the founders or their permitted transferees. Pursuant to the registration rights agreement, the holders of our private placement warrants and the underlying ordinary shares will be entitled to certain registration rights immediately after the consummation of our initial business combination. If we issue ordinary shares to consummate a business combination, the potential issuance of additional ordinary shares on exercise of these securities could make us a less attractive
acquisition vehicle to some target businesses. This is because exercise of the option or the warrants will increase the number of issued and outstanding ordinary shares and reduce the value of the shares issued to complete the business combination. Our convertible securities may make it more difficult to complete a business combination or increase the purchase price sought by one or more target businesses. Additionally, the sale or possibility of sale of the shares underlying the convertible securities could have an adverse effect on the market price for our ordinary shares or our units, or on our ability to obtain other financing. If and to the extent these warrants are exercised, you may experience dilution to your holdings.
The grant of registration rights to our founders may make it more difficult to complete a business combination, and the future exercise of such rights may adversely affect the market price of our ordinary shares.
Our founders will have certain registration rights with respect to the resale of their ordinary shares at any time one year after the consummation of our initial business combination. In addition, AEX Enterprises Limited, W.R. Hambrecht + Co., LLC, the Hambrecht 1980 Revocable Trust, Shea Ventures LLC and Marbella Capital Partners Ltd. will have certain registration rights with respect to the private placement warrants and the shares underlying the private placement warrants after the consummation of our initial business combination. We will bear the cost of registering these securities. In addition, in the event that we breach our obligations under
the registration rights agreement, we could be obligated to purchase the securities owned by our founders and their affiliates for the then fair market value of the securities. Assuming that the underwriters’ over-allotment option is not exercised, if our founders exercise their registration rights in full and we successfully register the shares and warrants described above, there will then be an additional 1,000,000 million ordinary shares and 1,150,000 warrants or up to 1,150,000 ordinary shares issued on exercise of the warrants that are eligible for trading in the public market. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our ordinary shares. In addition, the existence of the registration rights may make a business combination more costly or difficult to conclude. This is because the shareholders of the target business may increase the
36
TABLE OF CONTENTS
equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our ordinary shares that is expected when the securities owned by our founders are registered.
You will not be able to exercise your warrants if we don’t have an effective registration statement in place when you desire to do so.
No warrants will be exercisable, and we will not be obligated to issue ordinary shares upon exercise of warrants by a holder unless, at the time of such exercise, we have a registration statement under the Securities Act of 1933, as amended, in effect covering the ordinary shares issuable upon the exercise of the warrants and a current prospectus relating to ordinary shares. We have agreed to use our best efforts to have a registration statement in effect covering ordinary shares issuable upon exercise of the warrants from the date the warrants become exercisable and to maintain a current prospectus relating to ordinary shares until the warrants
expire or are redeemed. However, we cannot assure you that we will be able to do so. Additionally, we have no obligation to settle the warrants for cash in the absence of an effective registration statement or under any other circumstances. The warrants may be deprived of any value, the market for the warrants may be limited, the holders of warrants may not be able to exercise their warrants if there is no registration statement in effect covering the ordinary shares issuable upon the exercise of the warrants or the prospectus relating to the ordinary shares issuable upon the exercise of the warrants is not current and the warrants may expire worthless. If you are unable to exercise or sell your warrants, you will have paid the full unit price for only the ordinary shares underlying the units.
There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
There is currently no market for our securities. Shareholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to our reports of operating losses, one or more potential business combinations, the filing of periodic reports with the SEC, and general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination.
We may be deemed to be an investment company, as defined under Sections 3(a)(1)(A) and (C) of the Investment Company Act of 1940, if, following this offering and prior to the consummation of a business combination, we are viewed as engaging in the business of investing in securities or we own investment securities having a value exceeding 40% of our total assets. If we are deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it difficult for us to complete a business combination, including:
|
|
•
|
restrictions on the nature of our investments; and
|
|
|
•
|
restrictions on our issuance of securities.
|
In addition, we may have imposed upon us burdensome requirements, including:
|
|
•
|
registration as an investment company;
|
|
|
•
|
adoption of a specific form of corporate structure; and
|
|
|
•
|
reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
|
We do not believe that our anticipated activities will subject us to the Investment Company Act of 1940 as the net proceeds of this offering and sale of warrants in our private placement offering that are to be held in the trust account may only be invested by the trust agent in “government securities” with specific maturity dates. By restricting the investment of the trust account to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940. If we were deemed to be subject to the Investment Company Act of 1940, compliance with these additional
regulatory burdens would require additional expense that we have not allotted for.
37
TABLE OF CONTENTS
Companies with similar business plans to ours have had limited success in completing a business transaction. There can be no assurance that we will successfully identify a potential target business, or complete a business combination.
Based upon publicly available information as of December 17, 2007, we have identified approximately 144 similarly structured companies which have gone public since 2003, of which 42 have actually consummated a business combination and 7 have liquidated. As of such date, the remaining 95 companies have more than $12.8 billion in the trust account and are seeking to consummate business combinations. Of these companies, 24 have announced that they have entered into definitive agreements for business combinations but have not yet consummated these transactions.
While some of those companies have specific industries or geographies that they must complete a business combination in, a number of them may consummate a business combination in any industry they choose. We may therefore be subject to competition from these and other companies seeking to consummate a business plan similar to ours, which will, as a result, increase demand for privately-held companies to combine with companies structured similarly to ours. Further, the fact that only 42 of such companies have completed a business combination and 24 additional companies have entered into a definitive agreement for a business combination may be an
indication that there are only a limited number of attractive target businesses available to such entities or that many privately-held target businesses may not be inclined to enter into business combinations with publicly held blank check companies like us.
Based upon publicly-available information, approximately 19 similarly structured blank check companies focused on the PRC have completed initial public offerings from August 2003 through December 17, 2007 and numerous others have filed registration statements. Of these companies, 4 have consummated a business combination, while 3 have announced they have entered into a definitive agreement for a business combination. Accordingly, there are approximately 12 blank check companies with approximately $777 million in trust seeking to carry out a business plan similar to our business plan.
In addition, there are approximately 58 similarly structured blank check companies that have filed registration statements seeking to raise approximately $8.9 billion that have not yet been declared effective by the SEC (some of which may never be declared effective).
We cannot assure you that we will be able to successfully compete for an attractive business combination. Additionally, because of this competition, we cannot assure you that we will be able to effectuate a business combination within the required time periods. If we are unable to find a suitable target business within such time periods, we will be forced to liquidate.
We are dependent upon John Wang, Robert Eu, and Stephen N. Cannon and the loss of any of them could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals and, in particular, upon John Wang, Robert Eu, and Stephen N. Cannon. We believe that our success depends on the continued service of these persons, at least until we have consummated a business combination. We cannot assure you that such individuals will remain with us for the immediate or foreseeable future. In addition, none of John Wang, Robert Eu, and Stephen N. Cannon are required to commit any specified amount of time to our affairs and, accordingly, they will have conflicts of interest in allocating management time among various business activities, including
identifying potential business combinations and monitoring the related due diligence. Each of Messrs. Eu, Cannon and Lee Ting, another of our directors, are executives of W.R. Hambrecht + Co., LLC, an investment banking firm that provides underwriting and advisory services for companies, including other blank check companies that have the objective to acquire an operating business in the PRC. We do not have employment agreements with, or key-man insurance on the life of, either of these individuals. The unexpected loss of the services of either of these individuals could have a detrimental effect on us.
The determination of the offering price of our units and the size of this offering is more arbitrary than the pricing of securities and the size of an offering of an operating company in a particular industry.
Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the warrants were negotiated between us and the underwriters. In determining the size of this offering, management held customary organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets, generally, and
38
TABLE OF CONTENTS
the amount the representatives believed they reasonably could raise on our behalf. Factors considered in determining the size of this offering, prices and terms of the units, including the ordinary shares and warrants underlying the units, include:
|
|
•
|
the history and prospects of companies whose principal business is the acquisition of other companies;
|
|
|
•
|
prior offerings of those companies;
|
|
|
•
|
our prospects for acquiring an operating business at attractive values;
|
|
|
•
|
whether the net proceeds of this offering would be sufficient to allow us to acquire an operating business having a valuation between approximately $70 million and $150 million, assuming the need to raise additional funds, through a private offering of debt or equity securities;
|
|
|
•
|
a review of debt to equity ratios in leveraged transactions;
|
|
|
•
|
an assessment of our management and their experience in identifying operating companies;
|
|
|
•
|
general conditions of the securities markets at the time of this offering; and
|
|
|
•
|
other factors as were deemed relevant.
|
However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities of an operating company in a particular industry since we have no historical operations or financial results to compare them to.
Because we must furnish our shareholders with target business financial statements prepared in accordance with or reconciled to U.S. generally accepted accounting principles, we may not be able to complete a business combination with some prospective target businesses unless their financial statements are first reconciled to U.S. generally accepted accounting principles.
The federal securities laws require that a business combination meeting certain financial significance tests include historical and pro forma financial statement disclosure in periodic reports and proxy materials submitted to shareholders. Because our initial business combination must be with a target business that has a fair market value of at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) at the time of our initial business combination, we will be required to provide historical
and pro forma financial information to our shareholders when seeking approval of a business combination with one or more target businesses. These financial statements must be prepared in accordance with, or be reconciled to, applicable accounting standards, and the historical financial statements must be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. If a proposed target business, including one located outside of the U.S., does not have financial statements that have been prepared in accordance with, or that can be reconciled to, applicable accounting standards and audited in accordance with the standards of the PCAOB, we will not be able to acquire that proposed target business. These financial statement requirements may limit the pool of potential target businesses with which we may combine.
Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2008. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on management’s evaluation of our system of internal controls. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore,
39
TABLE OF CONTENTS
any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ordinary shares.
We may become a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are determined to be a passive foreign investment company, known as a “PFIC,” U.S. Holders (as defined in the section of this prospectus captioned “Taxation — United States Federal Income Taxation — General”) could be subject to adverse United States federal income tax consequences. Specifically, if we are determined to be a PFIC for any taxable year, each U.S. Holder may be subject to increased U.S. federal income tax and may be subject to additional reporting requirements. In general, we will be classified as a PFIC for any taxable year in which either (1) at least 75% of our gross income is
passive income or (2) at least 50% of the value (determined on the basis of a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. For purposes of these tests, cash, including working capital, and investments are considered assets that produce or are held for the production of passive income. We cannot assure you that we will not be a PFIC in the current or any future year. We urge U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules. For a more detailed explanation of the tax consequences of PFIC classification to U.S. Holders, see the section of this prospectus captioned “Taxation — U.S. Holder — United States Federal Income Taxation — Passive Foreign Investment Company Rules.”
An investment in this offering may involve adverse U.S. federal income tax consequences because the redemption or liquidation price per share may be greater than an investor’s initial tax basis in our ordinary shares.
While we intend to take a contrary position, there is a risk that an investor’s entitlement to receive payments in excess of the investors’ initial tax basis in our ordinary shares upon exercise of the investor’s redemption right or upon our liquidation will result in constructive income to the investor, which could affect the timing and character of income recognition and result in a U.S. federal income tax liability to the investor without the investor’s receipt of cash from us. Prospective investors are urged to consult their own tax advisors with respect to these tax risks, as well as the specific tax consequences to them of
purchasing, holding or disposing of our securities.
Risks associated with acquiring and operating a target business in China
After a business combination, substantially all of our assets could be located in China and substantially all of our revenue will be derived from our operations in China. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal developments in China.
The PRC’s economic, political and social conditions, as well as government policies, could affect our business. The PRC economy differs from the economies of most developed countries in many respects.
Since 1978 China has been one of the world’s fastest-growing economies in terms of gross domestic product, or GDP, growth. We cannot assure you, however, that such growth will be sustained in the future. If in the future China’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate a business combination and if we make an acquisition, the ability of that target business to become profitable.
Our ability to find an attractive target business with which to consummate a business combination is based in part on the assumption that the Chinese economy will continue to grow. The PRC’s economic growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall PRC economy, but may also have a negative effect on us, depending on the
40
TABLE OF CONTENTS
industry in which we engage in a business combination. For example, our business, prospects, financial condition and results of operations may be materially adversely affected by PRC government control over capital investments or changes in tax regulations that are applicable to a potential target business and a business combination.
The PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the PRC government has implemented measures emphasizing the use of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over PRC economic growth through the
allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. We cannot assure you that China’s economic, political or legal systems will not develop in a way that becomes detrimental to our business, prospects, financial conditions and results of operations.
If we acquire a target business through contractual arrangements with one or more operating businesses in China, such contracts may not be as effective in providing operational control as direct ownership of such businesses.
The government of the PRC has restricted or limited foreign ownership of certain kinds of assets and companies operating in certain industries. The industry groups that are restricted are wide ranging, including certain aspects of telecommunications, advertising, food production, and heavy equipment manufacturers, for example. In addition there can be restrictions on the foreign ownership of businesses that are determined from time to time to be in “important industries” that may affect the national economic security or having “famous Chinese brand names” or “well established Chinese brand names.” Subject to the review
and approval requirements of the Ministry of Commerce and other relevant agencies as discussed elsewhere for acquisitions of assets and companies in the PRC and subject to the various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors and parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual arrangements with permitted Chinese parties. To the extent that such agreements are employed, they may be for control of specific assets such as intellectual property or control of blocks of the equity ownership interests of a company which may provide exceptions to the merger and acquisition regulations mentioned above since these types of arrangements typically do not involve a change of equity ownership in PRC operating company. The agreements would be designed to provide our company with the economic benefits of and control over the subject assets or equity interests
similar to the rights of full ownership, while leaving the technical ownership in the hands of Chinese parties who would be our nominees and, therefore, may exempt the transaction from the merger and acquisition regulations, including the application process required thereunder. However, since there has been limited implementation guidance provided with respect to the merger and acquisition regulations. There can be no assurance that the relevant government agencies would not apply them to a business combination effected through contractual arrangements. If such an agency determines that such an application should have made, consequences may include levying fines, revoking business and other licenses, requiring restructure of ownership or operations and requiring discontinuation of any portion of all of the acquired business. These agreements likely also would provide for increased ownership or full ownership and control by us when and if permitted under PRC law and regulation. If we
choose to effect a business combination that employs the use of these types of control arrangements, we may have difficulty in enforcing our rights. Therefore, these contractual arrangements may not be as effective in providing us with the same economic benefits, accounting consolidation or control over a target business as would direct ownership. For example, if the target business or any other entity fails to perform his obligations under these contractual arrangements, we may have to incur substantial costs and expend substantial resources to enforce such arrangements, and rely on legal remedies under Chinese law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure will be sufficient to off-set the cost of enforcement and may adversely affect the benefits we expect to receive from the business combination.
41
TABLE OF CONTENTS
Contractual arrangements we enter into with potential future subsidiaries and affiliated entities or acquisitions of offshore entities that conduct PRC operations through affiliates in China may be subject to a high level of scrutiny by the PRC tax authorities.
Under PRC law, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. If any of the transactions we enter into with potential future subsidiaries and affiliated entities are found not to be on an arm’s-length basis, or to result in an unreasonable reduction in tax under PRC law, the PRC tax authorities have the authority to disallow any tax savings, adjust the profits and losses of such potential future PRC entities and assess late payment interest and penalties. A finding by the PRC tax authorities that we are ineligible for any such tax savings, or that any of our possible future
affiliated entities are not eligible for tax exemptions, would substantially increase our possible future taxes and thus reduce our net income and the value of a shareholder’s investment.
Because Chinese law governs almost all of any target business’ current material agreements, we may not be able to enforce our rights within the PRC or elsewhere, which could result in a significant loss of business, business opportunities or capital.
We believe that it is highly likely that Chinese law governs almost all of any target business’ current material agreements, some or many of which could be with Chinese governmental agencies. We cannot assure you that the target business will be able to enforce any of its material agreements or that remedies will be available outside of the PRC. The Chinese legal system is similar to a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. Although legislation in China over the past 25 years has significantly improved the protection afforded to various
forms of foreign investment and contractual arrangements in China, these laws, regulations and legal requirements are relatively new and their interpretation and enforcement involve uncertainties, which could limit the legal protection available to us, and foreign investors, including you. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital and could have a material adverse impact on our business, prospects, financial condition, and results of operations.
If relations between the United States and the PRC deteriorate, potential target businesses or their goods or services could become less attractive.
The relationship between the United States and the PRC is subject to sudden fluctuation and periodic tension. For instance, if the United States imposes quotas on Chinese imports, such import quotas may adversely affect political relations between the two countries and result in retaliatory countermeasures by the PRC in industries that may affect our ultimate target business. Relations may also be compromised if the U.S. becomes a more vocal advocate of Taiwan or proceeds to sell certain military weapons and technology to Taiwan. Changes in political conditions in the PRC and changes in the state of Sino-U.S. relations are difficult to predict and
could adversely affect our operations or cause potential target businesses or their goods and services to become less attractive.
If the PRC imposes restrictions to reduce inflation, future economic growth in the PRC could be severely curtailed which could lead to a significant decrease in our profitability following a business combination.
While the economy of the PRC has experienced rapid growth, this growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the supply of money and rising inflation. In order to control inflation in the past, the PRC has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. If similar restrictions are imposed, it may lead to a slowing of economic growth and decrease the interest in the services or products we may ultimately offer leading to a decline in our profitability.
As a result of merger and acquisition regulations implemented on September 8, 2006 relating to acquisitions of assets and equity interests of Chinese companies by foreign persons, it is expected that acquisitions will take longer and be subject to economic scrutiny by the PRC government authorities such that we may not be able to complete a transaction.
On September 8, 2006, the Ministry of Commerce, together with several other government agencies, implemented a comprehensive set of regulations governing the approval process by which a Chinese company may participate in an acquisition of its assets or its equity interests and by which a Chinese company may
42
TABLE OF CONTENTS
obtain public trading of its securities on a securities exchange outside the PRC. Although there was a complex series of regulations in place prior to September 8, 2006 for approval of Chinese enterprises that were administered by a combination of provincial and centralized agencies, the new regulations have largely centralized and expanded the approval process to the Ministry of Commerce (MOFCOM), the State Administration of Industry and Commerce (SAIC), the State Administration of Foreign Exchange (SAFE) or its branch offices, the State Asset Supervision and Administration Commission (SASAC), and the China Securities Regulatory Commission (CSRC).
Depending on the structure of the transaction, these regulations will require the Chinese parties to make a series of applications and supplemental applications to the aforementioned agencies, some of which must be made within strict time limits and depending on approvals from one or the other of the aforementioned agencies. The application process has been supplemented to require the presentation of economic data concerning a transaction, including appraisals of the business to be acquired and evaluations of the acquirer which will permit the government to assess the economics of a transaction in addition to the compliance with legal requirements. If obtained, approvals will have expiration dates by which a transaction must be completed. Also, completed transactions must be reported to MOFCOM and some of the other agencies within a short period after closing or be subject to an unwinding of the transaction. It is expected that compliance with the regulations will be more time
consuming than in the past, will be more costly for the Chinese parties and will permit the government much more extensive evaluation and control over the terms of the transaction. Therefore, acquisitions in China may not be able to be completed because the terms of the transaction may not satisfy aspects of the approval process and may not be completed, even if approved, if they are not consummated within the time permitted by the approvals granted.
Because the September 8, 2006 PRC merger and acquisition regulations permit the government agencies to have scrutiny over the economics of an acquisition transaction and require consideration in a transaction to be paid within stated time limits, we may not be able to negotiate a transaction that is acceptable to our shareholders or sufficiently protect their interests in a transaction.
The regulations have introduced aspects of economic and substantive analysis of the target business and the acquirer and the terms of the transaction by MOFCOM and the other governing agencies through submissions of an appraisal report, an evaluation report and the acquisition agreement, all of which form part of the application for approval, depending on the structure of the transaction. The regulations also prohibit a transaction at an acquisition price obviously lower than the appraised value of the Chinese business or assets. The regulations require that in certain transaction structures, the consideration must be paid within strict time periods,
generally not in excess of a year. Because the Chinese authorities have been concerned with offshore transactions which converted domestic companies into foreign investment enterprises (FIEs) in order to take advantage of certain benefits, including reduced taxation, in China, the new regulations require new foreign sourced capital of not less than 25% of the domestic company’s post–acquisition capital in order to obtain FIE treatment. Accordingly, if a sufficient amount of foreign capital is not infused into the domestic company, it will not be eligible to obtain FIE treatment. In asset transactions there must be no harm of third parties and the public interest in the allocation of assets and liabilities being assumed or acquired. These aspects of the regulations will limit our ability to negotiate various terms of the acquisition, including aspects of the initial consideration, contingent consideration, holdback provisions, indemnification provisions and provisions relating
to the assumption and allocation of assets and liabilities. Transaction structures involving trusts, nominees and similar entities are restricted. Therefore, we may not be able to negotiate a transaction with terms that will satisfy our investors and protect our shareholders interests in an acquisition of a Chinese business or assets.
The PRC merger and acquisition regulations of September 8, 2006 have introduced industry protection and anti-trust aspects to the acquisition of Chinese companies and assets which may limit our ability to effect an acquisition.
Under the PRC merger and acquisition regulations, acquisitions of Chinese domestic companies relating to “important industries” that may affect the national economic security or result in the transfer of “actual control” of companies having “famous Chinese brand names” or “well established Chinese brand names” must be reported and approved by the relevant agencies. The merger and acquisition regulations also provide for antitrust review requirements for certain large transactions or transactions involving large companies and roll-up transactions with the same effect in the relevant Chinese market. In addition,
certain mergers and acquisitions among foreign companies occurring outside of the PRC could also be subject to antitrust review
43
TABLE OF CONTENTS
in China which is similar to United States anti-trust law concepts. Exemptions may be sought from the MOFCOM and SAIC. Notwithstanding the September 8, 2006, regulations, there is a draft anti-monopoly law being considered which may replace or supplement the above provisions. Any transaction that we contemplate will have to comply with these regulations and may require additional approval or abandonment if we are not able to satisfy the requirements of the governmental authorities. When we evaluate a potential transaction, we will consider the need to comply with these regulations which may result in our modifying or not pursuing a particular
transaction.
The Ministry of Information Industry (MII) issued regulations that regulate and limit ownership and investment in internet and other value-added telecommunications businesses in China which may limit the type of businesses we will be able to acquire.
On July 13, 2006, the MII issued a notice with the purpose of increasing the regulation of foreign investment in and operations of value added telecom services which includes internet and telecommunications businesses in China. The regulations require Chinese entities to own and control the following: (i) internet domain names, (ii) registered trademarks, and (iii) servers and other infrastructure equipment used to host and operate web-sites and conduct business. The ownership requirements functionally limit foreign direct and indirect ownership and control of the intellectual property of these businesses even when attempted through various parallel
control, licensing, use and management agreements. It is anticipated that these regulations will be strictly enforced, and the government has provided that the new regulations apply retroactively and provides for audit procedures. The failure to comply may cause the MII to terminate a telecommunications license or otherwise modify existing agreements or require the disposition of the assets by the foreign entity. Any anticipated foreign investment in such businesses will be subject to prior approval by the MII, and it is expected that approval for investment may not be easily obtained for foreign investment in these businesses unless in strict compliance. Therefore, investment by us in this sector may not be actively pursued because certain assets may not be acquirable and accounting consolidation may be restricted or not permitted as a result of an unfavorable but permitted transaction structure.
Any devaluation of currencies used in the PRC could negatively impact our target business’ results of operations and any appreciation thereof could cause the cost of a target business as measured in dollars to increase.
Because our objective is to complete a business combination with a target business having its primary operating facilities located in the PRC, and because substantially all revenues and income following a business combination would be received in a foreign currency such as Renminbi, the main currency used in the PRC, the dollar equivalent of our net assets and distributions, if any, would be adversely affected by reductions in the value of the Renminbi. The value of the Renminbi fluctuates and is affected by, among other things, changes in the PRC’s political and economic conditions. To the extent that we need to convert United States dollars
into Chinese Renminbi for our operations, appreciation of this currency against the United States dollar could have a material adverse effect on our business, financial condition and results of operations. Conversely, if we decide to convert our Renminbi into United States dollars for other business purposes and the United States dollar appreciates against this currency, the United States dollar equivalent of the Renminbi we convert would be reduced. The conversion of Renminbi into foreign currencies such as the United States dollar has been generally based on rates set by the People’s Bank of China, which are set daily based on the previous day’s interbank foreign exchange market rates and current exchange rates on the world financial markets. Historically, China “pegged” its currency to the United States dollar. This meant that each unit of Chinese currency had a set ratio for which it could be exchanged for United States currency, as opposed to having a floating
value like other countries’ currencies. Many countries argued that this system of keeping the Chinese currency low when compared to other countries gave Chinese companies an unfair price advantage over foreign companies. Due to mounting pressure from other countries, the PRC recently reformed its economic policies to establish a floating value for its currency. However, since July 21, 2005, RMB has been re-pegged to a basket of currencies, and is permitted to fluctuate within a managed band. As of December 31, 2007, the exchange rate of the Renminbi was 7.23 against the United States dollar, amounting to a 13.6% appreciation of the Renminbi since July 21, 2005. This floating exchange rate, and any appreciation of the Renminbi that may result from such rate, could cause the cost of a target business as measured in dollars to increase. Further, target companies may be adversely affected since the competitive advantages that existed as a result of
44
TABLE OF CONTENTS
the former policies will cease. We cannot assure you that a target business with which we consummate a business combination will be able to compete effectively with the new policies in place.
Exchange controls that exist in the PRC may limit our ability to utilize our cash flow effectively following a business combination.
Following a business combination with a PRC target company, we will be subject to the PRC’s rules and regulations on currency conversion. In the PRC, the State Administration for Foreign Exchange (SAFE) regulates the conversion of the Renminbi into foreign currencies. Currently, foreign investment enterprises (FIEs) are required to apply to the SAFE for “Foreign Exchange Registration Certificates for FIEs.” Following a business combination, we will likely be an FIE as a result of our ownership structure. With such registration certificates, which need to be renewed annually, FIEs are allowed to open foreign currency accounts including
a “basic account” and “capital account.” Currency conversion within the scope of the “basic account,” such as remittance of foreign currencies for payment of dividends, can be effected without requiring the approval of the SAFE. However, conversion of currency in the “capital account,” including capital items such as direct investment, loans and securities, still require approval of the SAFE. We cannot assure you that the PRC regulatory authorities will not impose further restrictions on the convertibility of the Renminbi. Any future restrictions on currency exchanges may limit our ability to use our cash flow for the distribution of dividends to our shareholders or to fund operations we may have outside of the PRC.
If the PRC enacts regulations in our target business’ proposed industry segments which forbid or restrict foreign investment, our ability to consummate a business combination could be severely impaired.
Many of the rules and regulations that companies face in China are not explicitly communicated. If new laws or regulations forbid foreign investment in industries in which we want to complete a business combination, they could severely limit the candidate pool of potential target businesses. Additionally, if the relevant Chinese authorities find us or the target business with which we ultimately complete a business combination to be in violation of any existing or future Chinese laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation:
|
|
•
|
revoking our business and other licenses;
|
|
|
•
|
requiring that we restructure our ownership or operations; and
|
|
|
•
|
requiring that we discontinue any portion or all of our business.
|
Because any target business in China with which we attempt to complete a business combination will be required to provide our shareholders with audited financial statements prepared in accordance with certain accounting principles, the number of prospective target businesses may be limited.
In accordance with requirements of United States federal securities laws, in order to seek shareholder approval of a business combination, a proposed target business will be required to have certain financial statements which are prepared in accordance with, or which are reconciled to, certain accounting principles. To the extent that a proposed target business does not have financial statements which have been prepared with, or which can be reconciled to, applicable accounting standards, we will not be able to acquire that proposed target business. These financial statements may limit the pool of potential target businesses which we may acquire.
If our management following a business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws which could lead to various regulatory issues.
Following a business combination, our management will likely resign from their positions as officers of the company and the management of the target business at the time of the business combination will remain in place. We cannot assure you that management of the target business will be familiar with United States securities laws. If new management is unfamiliar with our laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
45
TABLE OF CONTENTS
If certain exemptions within the PRC regarding withholding taxes are removed, we may be required to deduct Chinese corporate withholding taxes from dividends we may pay to our shareholders following a business combination.
According to the PRC’s currently applicable income tax laws, regulations, notices and decisions related to foreign investment enterprises and their investors (the “Applicable Foreign Enterprises Tax Law”), income such as dividends and profits distribution from the PRC subsidiary of a foreign enterprise which has no establishment in the PRC is subject to an effective 10% withholding tax, unless the relevant income is specifically exempted from tax under the Applicable Foreign Enterprises Tax Law. Currently, profits derived by a shareholder, such as through dividends, from an FIE is exempted. However, if the foregoing exemption is
removed in the future following a business combination, we may be required to deduct certain amounts from dividends we may pay to our shareholders to pay corporate withholding taxes. In addition, on March 16, 2007, the National People’s Congress approved and promulgated the Enterprise Income Tax Law. This new law took effect as of January 1, 2008. Under the new tax law, income from the PRC subsidiary of a foreign enterprise which has no establishment in the PRC is subject to a 20% withholding tax absent a tax treaty between China and another jurisdiction. Much of the detailed implementation guidance has yet to be provided by the China government. Changes in tax laws or interpretation of tax laws by the government could significantly impact our return to the investors.
If any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive.
If you are a U.S. Holder, you will be taxed on the U.S. dollar value of your dividends at the time you receive them, even if you actually receive a smaller amount of U.S. dollars when the payment is in fact converted into U.S. dollars. Specifically, if a dividend is declared and paid in a foreign currency, the amount of the dividend distribution that you must include in your income as a U.S. Holder will be the U.S. dollar value of the payments made in the foreign currency, determined at the conversion rate of the foreign currency to the U.S. dollar on the date the dividend distribution is includible in your income, regardless of whether the payment
is in fact converted into U.S. dollars. Thus, if the value of the foreign currency decreases before you actually convert the currency into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive.
After we consummate a business combination, our operating company in China will be subject to restrictions on dividend payments.
After we consummate a business combination, we may rely on dividends and other distributions from our operating company to provide us with cash flow and to meet our other obligations. Current regulations in China would permit our operating company in China to pay dividends to us only out of its accumulated distributable profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our operating company in China will be required to set aside at least 10% (up to an aggregate amount equal to half of its registered capital) of its accumulated profits each year. Such cash reserve may not be distributed as cash
dividends. In addition, if our operating company in China incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us.
The PRC government has enacted a new law on enterprise income tax, and as it implements this law the tax and fee benefits provided to foreign investors and companies to encourage development within the country may be lessened or removed with the consequence that expenses may rise impacting margins and net income.
Under the currently effective PRC Foreign Investment Enterprise and Foreign Enterprise Income Tax Law adopted by the National People’s Congress (NPC) on April 9, 1991 and the implementation rules applicable to an FIE, an income tax rate of 33% is generally imposed on an FIE, consisting of a 30% national income tax and a 3% local surcharge, for their domestic and overseas incomes. If the FIE is engaged in manufacturing with an operating period of more than 10 years, it could further be exempted from enterprise income tax for two years beginning from its first profitable year, and allowed a 50% reduction in enterprise income tax for a period of
three years thereafter.
46
TABLE OF CONTENTS
A company might receive certain additional preferential enterprise income tax treatment if it qualifies as a company especially supported by the PRC government. FIEs in certain areas (e.g., some free trade zones and some technology parks) might also receive further reductions in their enterprise income tax rate. The PRC government authorities, however, could reduce or eliminate these incentives at any time in the future.
Since China joined the World Trade Organization (WTO), in November 2001, this preferential tax treatment has been criticized as not being WTO-compliant. On March 16, 2007, the NPC, approved and promulgated a new tax law: the PRC Enterprise Income Tax Law. This new tax law will take effect on January 1, 2008. Under the new tax law, FIEs and domestic companies are subject to a uniform tax rate of 25%. The new tax law provides a five-year transition period starting from its effective date for those enterprises which were established before the promulgation date of the new tax law and which were entitled to a preferential lower tax rate under the
then-effective tax laws or regulations. In accordance with regulations issued by the State Council, the tax rate of such enterprises may gradually transition to the uniform tax rate within the transition period. For those enterprises which are enjoying tax holidays, such tax holidays may continue until their expiration in accordance with the regulations issued by the State Council, but where the tax holiday has not yet started because of losses, such tax holiday shall be deemed to commence from the first effective year of the new tax law. Although the new tax law equalizes the tax rates for FIEs and domestic companies, preferential tax treatment would continue to be given to both FIEs and domestic companies in certain encouraged sectors and to entities classified as high-technology companies supported by the PRC government. According to the new tax law, entities that qualify as high-technology companies especially supported by the PRC government are expected to benefit from a tax rate
of 15% as compared to the uniform tax rate of 25%. Nevertheless, there can be no assurances that any particular company will continue to qualify as a high-technology company supported by the PRC government in the future, and benefit from such preferential tax rate. Following the effectiveness of the new tax law, a company’s effective tax rate may increase, unless it is otherwise eligible for preferential treatment.
Additionally, under the new tax law, an income tax rate for dividends payable to non-PRC investors and derived from sources within the PRC may be increased to 20%. It is currently unclear in what circumstances a source will be considered as located within the PRC.
Investors should note that the new tax law provides only a framework of the enterprise tax provisions, leaving many details on the definitions of numerous terms as well as the interpretation and specific applications of various provisions unclear and unspecified. Any increase in our tax rate in the future could have a material adverse effect on our financial conditions and results of operations.
Recent regulations relating to offshore investment activities by PRC residents may increase the administrative burden we face and create regulatory uncertainties that may limit or adversely effect our ability to acquire PRC companies.
Regulations were issued on January 24, 2005, on April 8, 2005 and on October 21, 2005, by the SAFE, that will require approvals from, and registrations with, PRC government authorities in connection with direct or indirect offshore investment activities by PRC residents and PRC corporate entities.
In January 2005, SAFE issued a public notice concerning foreign exchange regulations on mergers and acquisitions in China. The notice required that if an offshore company controlled by Chinese residents intends to acquire a Chinese company, such acquisition will be subject to strict examination by the relevant foreign exchange authorities, i.e., SAFE or it local office, as the case may be. The public notice also required approval by SAFE for any sale or transfer by the Chinese residents of a Chinese company’s assets or equity interests to foreign entities, such as us, for equity interests or assets of the foreign entities.
In April 2005, SAFE issued another public notice to “interpret” the January notice. The April notice further required Chinese residents to register with the local SAFE branch with respect to their respective ownership interests in the offshore company if such PRC resident-controlled offshore company had already been approved to set up a Chinese subsidiary prior to the promulgation of the January notice. The PRC residents are also required to file an amendment to such registration if the offshore company experiences material events, such as changes in the share capital, share transfer, mergers and acquisitions, spin-off transaction or use of
assets in China to guarantee offshore obligations. Failure to comply with the registration procedures, according to the notice, may result in a restriction on the Chinese subsidiary’s ability to distribute profits in
47
TABLE OF CONTENTS
foreign exchange to its offshore parent company or to pay to the offshore parent company proceeds from any reduction in capital, share transfer or liquidation in respect of such subsidiary.
On October 21, 2005, SAFE issued the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Reverse Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or Notice 75, which became effective as of November 1, 2005. Notice 75 repealed the previous January and April SAFE notices. Notice 75 requires each PRC resident, whether a natural or legal person, to complete the overseas investment foreign exchange registration procedures with the relevant local SAFE branch, prior to establishing or assuming control of an offshore company for the purpose of acquiring assets or equity
interests in the PRC and using these assets to seek overseas financing (known as “round-trip investment”). In addition, an amendment to the registration with the local SAFE branch is required to be filed by any PRC resident that directly or indirectly holds interests in that offshore company upon either (1) the injection of equity interests or assets of an onshore enterprise to the offshore company, or (2) the completion of any overseas fund raising by such offshore company. An amendment to the registration is also required to be filed by such PRC resident when there is any material change involving a change in the capital of the offshore company. Moreover, Notice 75 applies retroactively. As a result, PRC residents who have established or acquired control of offshore companies that have made onshore investments in the PRC in the past are required to complete the relevant overseas investment foreign exchange registration procedures by March 31, 2006.
To implement Notice 75, SAFE issued an implementation notice in May 2007, known as Circular 106. The Circular 106 specified the circumstances under which the PRC residents are required to comply with Notice 75 and which procedures are to be followed up. Under this circular, for the PRC resident who failed to file for SAFE registration under Notice 75 as of March 31, 2006 for the existing special purpose overseas company, the dividends remitted by the PRC subsidiary to its overseas parent since April 21, 2005 will be deemed illegal and a penalty will be imposed on the PRC company and its actual controlling person(s). In addition, failure to comply
with the registration procedures set forth in Notice 75 and Circular 106 may result in restrictions on the relevant PRC subsidiary, including the payment of dividends and other distributions to its offshore parent or affiliate and the capital inflow from the offshore entity. Non-compliance may also subject relevant PRC residents to penalties under PRC foreign exchange administration regulations, and may result in liability under PRC law for foreign exchange evasion.
As a Cayman Islands company, and therefore an offshore company for purpose of SAFE regulations, if we purchase the assets or equity interest of a Chinese company owned by Chinese residents, including those which we will generate revenue from and exercise control over through agreements, such Chinese residents who become our shareholders will be subject to registration procedures described in the aforementioned SAFE notices and circular. Moreover, Chinese residents who are already our beneficial shareholders may be required to register with SAFE in connection with their shareholdings in us. Failure of any PRC shareholders of us to register with SAFE
may limit our PRC subsidiaries’ ability to distribute dividends to us.
The M&A Rules, along with foreign exchange regulations discussed in this subsection, will be interpreted or implemented by the relevant government authorities in connection with our future offshore financings or acquisitions, and we cannot predict how they will affect our acquisition strategy. For example, our prospective target or partner’s ability to remit dividends to us, or to engage in foreign-currency-denominated borrowings, may be conditioned upon compliance with the SAFE registration requirements by such Chinese residents, over whom we may have no control. In addition,we cannot assure you that such Chinese residents will be able to
complete the necessary approval and registration procedures required by the SAFE regulations because we have no control over the outcome of the registration procedures. Such uncertaintiesmay restrict our ability to implement our acquisition strategy and adversely affect our business and prospects.
Our future PRC subsidiaries are obligated to withhold and pay PRC individual income tax on behalf of our employees who are subject to PRC individual income tax. If we fail to withhold or pay such individual income tax in accordance with applicable PRC regulations, we may be subject to certain sanctions and other penalties and may become subject to liability under PRC laws.
Under PRC laws, our future PRC subsidiaries are obligated to withhold and pay individual income tax on behalf of our employees who are subject to PRC individual income tax. While tax authorities may advise us that our policy is compliant, they may change their policy, and we could be subject to sanctions.
48
TABLE OF CONTENTS
In addition, the State Administration of Taxation has issued several circulars concerning employee stock options. Under these circulars, our employees working in China (which could include both PRC employees and expatriate employees subject to PRC individual income tax) who exercise stock options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee stock options with relevant tax authorities and withhold and pay individual income taxes for those employees who exercise their stock options. While tax authorities may advise us that our policy is compliant, they may change their policy,
and we could be subject to sanctions.
If the PRC government determines that we failed to obtain requisite PRC governmental approvals for, or register with the PRC government, our future import and export of technologies, we could be subject to sanctions.
China imposes controls on technology import and export. The term “technology import and export” is broadly defined to include, without limitation, the transfer or license of patents, software and know-how, and the provision of services in relation to technology. Depending on the nature of the relevant technology, the import and export of technology require either approval by, or registration with, the relevant PRC governmental authorities. We can make no assurances that we will successfully obtain such approval or complete such registration.
If we are found to be in violation of PRC laws or regulations, the relevant regulatory authorities have broad discretion in dealing with such violation, including, but not limited to, issuing a warning, levying fines, restricting us from remitting royalties or any other fees, if any, relating to these technologies outside of China, confiscating our earnings generated from the import or export of such technology or even restricting our future export and import of any technology. Even if we successfully obtain such approval or complete such registration, if the PRC government determines that our import and export of technology is inconsistent with, or
insufficient for, the proper operation of our business, we could be subject to similar sanctions. Any of these or similar sanctions could cause significant disruption to our business operations or render us unable to conduct a substantial portion of our business operations and may adversely affect our business and result of operations.
49
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this prospectus that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about our:
|
|
•
|
ability to complete a combination with one or more target businesses;
|
|
|
•
|
success in retaining or recruiting, or changes required in, our officer or directors following a business combination;
|
|
|
•
|
officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving a business combination, as a result of which they would then receive expense reimbursements;
|
|
|
•
|
potential inability to obtain additional financing to complete a business combination;
|
|
|
•
|
limited pool of prospective target businesses;
|
|
|
•
|
the ability of our officers and directors to generate a number of potential investment opportunities;
|
|
|
•
|
potential change in control if we acquire one or more target businesses for equity securities;
|
|
|
•
|
public securities’ limited liquidity and trading;
|
|
|
•
|
failure to list or delisting of our securities from the OTC Bulletin Board or an inability to have our securities listed on the OTC Bulletin Board following a business combination;
|
|
|
•
|
use of proceeds not in the trust account or available to us from interest income on the trust account balance; or
|
|
|
•
|
financial performance following this offering.
|
The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the
heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws and/or if and when management knows or has a reasonable basis on which to conclude that previously disclosed projections are no longer reasonably attainable.
50
TABLE OF CONTENTS
USE OF PROCEEDS
We estimate that the net proceeds of this offering and the sale of the private placement warrants will be as set forth in the following table:
|
|
|
|
|
|
|
|
|
Without
Over-Allotment
Option
Exercised
|
|
With
Over-Allotment
Option
Exercised
|
|
Offering gross proceeds
|
|
$
|
32,000,000
|
|
|
$
|
36,800,000
|
|
|
Private placement warrants
|
|
|
1,150,000
|
|
|
|
1,150,000
|
|
|
Total gross proceeds
|
|
|
33,150,000
|
|
|
|
37,950,000
|
|
Offering expenses
(1)
,
(2)
|
|
|
|
|
|
|
|
|
|
Underwriting discount — current (4% of Gross proceeds)
|
|
|
1,280,000
|
|
|
|
1,472,000
|
|
|
Underwriting discount — deferred (3% of Gross proceeds)
|
|
|
960,000
|
|
|
|
1,104,000
|
|
|
Legal fees and expenses
(3)
|
|
|
300,000
|
|
|
|
300,000
|
|
|
Printing and engraving expenses
(3)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Accounting fees and expenses
(3)
|
|
|
30,000
|
|
|
|
30,000
|
|
|
SEC registration fee
(3)
|
|
|
2,115
|
|
|
|
2,115
|
|
|
FINRA registration fee
(3)
|
|
|
14,300
|
|
|
|
14,300
|
|
|
Miscellaneous expenses
(3)
|
|
|
22,000
|
|
|
|
22,000
|
|
|
Total offering expenses
|
|
$
|
2,658,415
|
|
|
$
|
2,994,415
|
|
|
Proceeds after offering expenses
|
|
$
|
30,491,585
|
|
|
$
|
34,955,585
|
|
|
Net proceeds of the offering and the private placement held in trust
|
|
|
30,080,000
|
|
|
$
|
34,544,000
|
|
|
Deferred underwriting discounts and commissions held in trust
|
|
|
960,000
|
|
|
|
1,104,000
|
|
|
Total held in trust
|
|
$
|
31,040,000
|
|
|
$
|
35,648,000
|
|
|
Net offering proceeds not held in trust
|
|
$
|
411,585
|
|
|
$
|
411,585
|
|
|
Percent held in trust
|
|
|
97.00
|
%
|
|
|
96.87
|
%
|
Working capital-funded from net proceeds not held in trust and interest earned on monies held in trust (a maximum of $1,350,000)
|
|
|
|
|
|
|
Percentage
of total
|
|
|
Due diligence of prospective target businesses, including fees for market research or consultants used to perform due diligence, if any, and reimbursement of out-of-pocket due diligence expenses incurred by our management team
|
|
$
|
450,000
|
|
|
|
25.5
|
%
|
|
Legal, accounting and other non-due diligence expenses, including structuring and negotiating a business combination
|
|
$
|
400,000
|
|
|
|
22.7
|
%
|
|
Payment for office space, administrative and support services to Hambrecht Eu Capital Management LLC ($7,500 per month for up to 36 months)
|
|
$
|
270,000
|
|
|
|
15.3
|
%
|
|
Legal and accounting fees relating to SEC reporting obligations
|
|
$
|
100,000
|
|
|
|
5.7
|
%
|
|
Working capital to cover miscellaneous expenses (potentially including deposits or down payments for a proposed business combination), director and officer liability insurance premiums and reserves
|
|
$
|
541,585
|
|
|
|
30.7
|
%
|
|
Total
|
|
$
|
1,761,585
|
|
|
|
100.00
|
%
|
|
|
(1)
|
The offering expenses will be primarily funded from the proceeds of this offering. All of the offering expenses to date have been paid from amounts received pursuant to a revolving credit line from Robert Eu, our Chairman and Secretary, as described below. These advances will be repaid within 15 days after the consummation of this offering. The advances will be paid from the proceeds of the offering and will not reduce our working capital after the completion of this offering.
|
|
|
(2)
|
These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein.
|
51
TABLE OF CONTENTS
|
|
(3)
|
Indicates an offering expense partially or fully paid for by the revolving credit line described in footnote 1. Currently, the following expenses have been paid: $109,756 of legal fees; $30,000 of accounting fees; all of the SEC and FINRA registration fee, an aggregate of $16,415; $16,031 of printing and engraving expenses; and $11,488 of miscellaneous expenses (which includes start-up costs, bank fees, printers and other expenses related to background checks).
|
A total of approximately $31.0 million (or approximately $35.6 million if the underwriters’ over-allotment option is exercised in full) of the net proceeds from this offering and the sale of the private placement warrants described in this prospectus, including $960,000 (or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full) of deferred underwriting discounts and commissions, will be placed in a trust account at HSBC with Continental Stock Transfer & Trust Company as trustee. We believe the $411,585 funds initially available to us outside of the trust account, together with one-half of the interest
income on the balance of the trust account (up to a maximum of $1,350,000) to be released to us to fund our working capital requirements, will be sufficient to allow us to operate for at least the next 36 months, assuming a business combination is not completed during that time.
Except for the interest income earned on the balance in the trust account to be released to us to fund our working capital requirements and any amounts paid to redeeming shareholders voting against the extended period upon approval by our shareholders, the proceeds held in the trust account will not be released from the trust account until the earlier of the consummation of a business combination or our liquidation. All amounts held in the trust account that are not:
|
|
•
|
distributed to public shareholders who exercise redemption rights;
|
|
|
•
|
released to us to pay taxes;
|
|
|
•
|
released to us as interest income; or
|
|
|
•
|
payable to the underwriters for deferred discounts and commissions,
|
will be released to us on closing of our initial business combination.
Our initial business combination will be with one or more target businesses that have a fair market value of at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) at the time of such business combination, subject to:
|
|
•
|
a majority of our public shareholders voting in favor of the business combination and one share less than 30.0% of the public shareholders electing to exercise their redemption rights (on a cumulative basis); and
|
|
|
•
|
such deferred underwriting discount and commission having been paid to the underwriters.
|
If our initial business combination involves a transaction in which we acquire less than a 100% interest in the target company, the value of that interest that we acquire will be equal to at least 80% of the sum of the balance in the trust account (excluding deferred underwriting discounts and commissions and taxes payable). In all instances, we would be the controlling shareholder of the target company. The key factors that we will rely on in determining controlling shareholder status would be our acquisition of at least 51% of the voting equity interests of the target company and control of the majority of any governing body of the target company.
We will not consider any transaction that does not meet such criteria.
We intend to acquire an operating business through a stock exchange, asset acquisition or other similar business combination; however, there are a number of industries in China in which direct foreign investment is restricted (including telecommunications services, online commerce and advertising). Therefore, if our target business is an industry that is subject to these requirements we may seek to acquire control of our target business through contractual arrangements with licensed companies operating in China and their owners. We may enter into a business combination in which we, our subsidiaries and/or affiliates, and the target business and its
shareholders enter into a series of contracts that are designed to secure for us economic benefits and to assume by us the risks of losses that are substantially similar to full ownership. These contracts could, for example, result in a structure where, in exchange for our payment of the acquisition consideration, the target
52
TABLE OF CONTENTS
business would be owned 100% by Chinese residents whom we designate, and the target business would continue to hold the requisite licenses necessary to operate its business. We may also establish a new subsidiary in China which would provide technology, technical support, consulting and related services to the target business in exchange for fees, which are designed to transfer to us substantially all of the economic benefits of ownership of the target business.
On release of funds from the trust account and after payment of the redemption price to any public shareholders who exercise their redemption rights, the underwriters will receive their deferred underwriting discounts and commissions, and the remaining funds will be released to us and can be used to pay all or a portion of the purchase price of the business or businesses with which our initial combination occurs. If the business combination is paid for using equity or debt securities, we may apply the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the acquired
business or businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business combination, to fund the purchase of other companies, or for working capital.
We have agreed to pay to Hambrecht Eu Capital Management LLC, an affiliate of Robert Eu, one of our founders and our Chairman and Secretary, and Elizabeth Hambrecht, Mr. Eu’s wife, a total of $7,500 per month for office space, administrative services and secretarial support beginning on November 15, 2007 and continuing until the earlier of our consummation of a business combination or our liquidation. This arrangement is being agreed to by Hambrecht Eu Capital Management LLC for our benefit and is not intended to provide Mr. Eu compensation in lieu of a management fee or other remuneration because it is anticipated that the expenses to be paid
by to Hambrecht Eu Capital Management LLC will approximate the monthly reimbursement. We believe that such fees are at least as favorable as we could have obtained from an unaffiliated person. Upon consummation of a business combination or our liquidation, we will cease paying these monthly fees.
We believe that amounts not held in the trust account and one-half of the interest income that may be released to us (up to a maximum of $1,350,000) will be sufficient to pay the costs and expenses to which such proceeds are allocated. This belief is based on the fact that in-depth due diligence will be undertaken only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of a business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating a business combination is less than the actual amount necessary to do so, we may be required to raise
additional capital, the amount, availability and cost of which is currently unascertainable. In this event, we could seek such additional capital through loans or additional investments from our founders or our directors. None of such founders, or our directors is under any obligation to advance funds to, or invest in, us.
Robert Eu, our Chairman and Secretary, provided us with a $290,000 revolving credit line to pay the expenses of this offering referenced in the line items above for the SEC registration fee, FINRA registration fee, blue sky legal and filing fees and accounting and legal fees and expenses. As of December 31, 2007, there was $281,661 outstanding under this revolving credit line. These advances bear interest at a rate of 4% per year, are unsecured and are due within 15 days following the consummation of this offering.
The net proceeds of this offering not immediately required for the purposes set forth above will be invested only in United States “government securities” (as such term is defined in the Investment Company Act of 1940) and one or more money market funds, selected by us, which invest principally in either short-term securities issued or guaranteed by the United States having a rating in the highest investment category granted thereby by a recognized credit rating agency at the time of acquisition or short-term tax exempt municipal bonds issued by governmental entities located within the United States, so that we are not deemed to be an
investment company under the Investment Company Act. One-half of the interest income on the trust account balance (up to $1,350,000) is releasable to us from the trust account from time to time to fund a portion of our working capital and general corporate requirements.
Other than the fee for office space and administrative and secretarial services described above, we will not pay fees of any kind (including finder’s and consulting fees) to any of our officers and directors, or any of their affiliates, for services rendered to us prior to or in connection with the consummation of the business combination. However, our officers and directors will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses
53
TABLE OF CONTENTS
and performing due diligence on suitable business combinations. There are no limitations on the amount of expenses for which they can seek reimbursement, provided such expenses were incurred for our benefit. We expect that due diligence of prospective target businesses will be monitored or performed by John Wang, Robert Eu and Stephen N. Cannon. Additionally, we may engage market research firms and/or third party consultants. Our board of directors will have the responsibility of reviewing and approving all expense reimbursements made to our directors, with the interested director or directors abstaining from such review and approval. To the extent
that such expenses exceed the available proceeds not deposited in the trust account and interest income that is released to us from the trust account, such out-of-pocket expenses would not be reimbursed by us unless we consummate a business combination. These expenses would be a liability of the post-combination business and would be treated in a manner similar to any other account payable of the combined business. Our officers and directors may, as part of any such combination, negotiate the repayment of some or all of any such expenses. If the target business’ owners do not agree to such repayment, this could cause our directors to view such potential business combination unfavorably and result in a conflict of interest. Since the role of present management after a business combination is uncertain, we have no current ability to determine what remuneration, if any, will be paid to those persons after a business combination.
A shareholder will be entitled to receive funds from the trust account (including interest earned on his, her or its portion of the trust account, net of income and franchise taxes payable with respect to such interest, and less interest income released to us from the trust account in the manner described above) only in the event of (i) our liquidation if we fail to complete a business combination within the allotted time or (ii) if the public shareholder seeks to have us redeem such shares for cash in connection with (a) the proposal for the extended period that the shareholder voted against and was actually approved by our shareholders and/or (b) a
business combination that the public shareholder voted against and that we actually complete. In no other circumstances will a shareholder have any right or interest of any kind in or to funds in the trust account.
On consummation of an initial business combination, the underwriters will receive the deferred underwriters’ discounts and commissions held in the trust account. If we do not complete an initial business combination and the trustee must therefore distribute the balance in the trust account on our liquidation, the underwriters have agreed (i) to forfeit any rights or claims to the deferred underwriting discounts and commissions, together with any accrued interest thereon, in the trust account and (ii) that the trustee is authorized to distribute the deferred underwriting discounts and commissions, together with any accrued interest thereon, net
of income and franchise taxes payable on such interest, to the public shareholders on a pro rata basis.
DIVIDEND POLICY
We have not paid any dividends on our ordinary shares to date and we do not intend to pay cash dividends prior to the consummation of a business combination. After we complete a business combination, the payment of dividends will depend on our revenues and earnings, if any, capital requirements and general financial condition. The payment of dividends after a business combination will be within the discretion of our then-board of directors. Our board of directors currently intends to retain any earnings for use in our business operations and, accordingly, we do not anticipate the board declaring any dividends in the foreseeable future.
54
TABLE OF CONTENTS
DILUTION
The difference between the public offering price per ordinary share, assuming no value is attributed to the warrants included in the units, and the pro forma net tangible book value per ordinary share after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of the ordinary shares which may be redeemed for cash), by the number of outstanding ordinary shares. The information below assumes the payment in full of the underwriters’ discounts and commissions,
including amounts held in the trust account, and no exercise of the over-allotment option.
At December 31, 2007, our net tangible book value was a deficiency of $179,990, or approximately $0.18 per ordinary share. After giving effect to the sale of 4,000,000 ordinary shares included in the units and the sale of 1,150,000 private placement warrants, and the deduction of underwriting discounts and estimated expenses of this offering, our pro forma net tangible book value (as decreased by the value of 1,199,999 ordinary shares which may be redeemed for cash) at December 31, 2007 would have been $21,470,855 or $5.84 per share, representing an immediate increase in net tangible book value of $6.02 per share to our founders and an immediate
dilution of $2.16 per share or 27% to new investors not exercising their redemption rights. For purposes of presentation, our pro forma net tangible book value after this offering is approximately $8,927,993 less than it otherwise would have been because if we effect a business combination, the redemption rights of the public shareholders may result in the redemption for cash of up to one share less than 30.0% of the aggregate number of the shares sold in this offering at a per-share redemption price equal to the amount in the trust account as of two business days prior to the proposed consummation of a business combination, inclusive of any interest, net of any income and franchise taxes due on such interest and net of interest income on the trust account balance previously released to us to fund working capital requirements, divided by the number of shares sold in this offering.
The following table illustrates the dilution to the new investors on a per-share basis, assuming no value is attributed to the warrants included in the units:
|
|
|
|
|
|
|
Public offering price
|
|
|
|
|
|
$
|
8.00
|
|
|
Net tangible book value before this offering
|
|
$
|
(0.18
|
)
|
|
|
|
|
|
Increase attributable to new investors
|
|
|
6.02
|
|
|
Pro forma net tangible book value after this offering
|
|
|
|
|
|
|
5.84
|
|
|
Dilution to new investors
|
|
|
|
|
|
$
|
2.16
|
|
The following table sets forth information with respect to our founders and the new investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased
|
|
Total Consideration
|
|
Average Price
Per Share
|
|
|
|
Number
|
|
Percentage
|
|
Amount
|
|
Percentage
|
|
Founders’ shares
(1)
|
|
|
1,000,000
|
|
|
|
20.00
|
%
|
|
$
|
25,000
|
|
|
|
.08
|
%
|
|
$
|
.02
|
|
|
New investors
|
|
|
4,000,000
|
|
|
|
80.00
|
%
|
|
$
|
32,000,000
|
|
|
|
99.92
|
%
|
|
$
|
8.00
|
|
|
Total
|
|
|
5,000,000
|
|
|
|
100.00
|
%
|
|
$
|
32,025,000
|
|
|
|
100
|
%
|
|
|
|
|
|
|
(1)
|
Does not include the 1,150,000 shares underlying the private placement warrants or up to 150,000 shares that we will redeem from the founders to the extent the underwriters do not exercise their over-allotment option.
|
55
TABLE OF CONTENTS
The pro forma net tangible book value after this offering is calculated as follows:
|
|
|
|
Numerator:
|
|
|
|
|
|
Net tangible book value before this offering and sale of private placement warrants
|
|
$
|
(179,990
|
)
|
Proceeds from this offering (not including deferred underwriting
discount) and the private placement
(3)
|
|
|
30,779,585
|
|
|
Plus: Offering costs accrued for and paid in advance, excluded from tangible book value before this offering
|
|
|
183,253
|
|
Less: proceeds held in the trust account subject to redemption to cash
(1,199,999 × $7.76)
|
|
|
(9,311,992
|
)
|
|
|
|
$
|
21,470,856
|
|
Denominator
|
|
|
|
|
|
Ordinary shares outstanding prior to this offering
(1)
|
|
|
1,000,000
|
|
|
Ordinary shares included in the units offered
|
|
|
4,000,000
|
|
|
Less: shares subject to redemption (4,000,000 × 30.0% - 1)
|
|
|
1,199,999
|
|
|
Less: founding shares subject to redemption
(2)
|
|
|
124,736
|
|
|
|
|
|
3,675,265
|
|
|
|
(1)
|
Does not include the 150,000 shares that we will redeem from the founders if the underwriters do not exercise their over-allotment option.
|
|
|
(2)
|
In the event that holders of more than 20% of the ordinary shares sold in this offering elect to redeem their shares, our existing shareholders have agreed to forfeit that number of shares (up to a maximum of 124,736) that will result in the number of shares owned by them prior to this offering collectively being no more than 23.81% of our outstanding ordinary shares immediately prior to the consummation of such business combination after giving effect to the redemption.
|
|
|
(3)
|
Includes $288,000 of the deferred underwriting discount that is subject to forfeiture in the event of a 29.99% redemption.
|
56
TABLE OF CONTENTS
CAPITALIZATION
The following table sets forth our capitalization on:
|
|
•
|
an actual basis at December 31, 2007; and
|
|
|
•
|
an as adjusted basis to give effect to the sale of our units and the private placement warrants, and the application of the estimated net proceeds derived from the sale of such securities.
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007
|
|
|
|
Actual
|
|
As Adjusted
|
|
|
|
(Unaudited)
|
|
|
|
Notes payable to affiliates
(1)
|
|
$
|
281,661
|
|
|
$
|
—
|
|
|
Deferred underwriting discounts and commissions
|
|
|
—
|
|
|
|
672,000
|
|
Ordinary shares, 0 and 1,199,999 shares which are subject to possible
redemption, shares at redemption value
(2)
|
|
|
—
|
|
|
|
9,311,992
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
Preferred shares, $0.001 par value, 1,000,000 shares authorized; none issued or outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Ordinary shares, $0.001 par value, 50,000,000 shares authorized; 1,150,000 shares issued and outstanding; 3,800,001 shares issued and outstanding (excluding 1,199,999 shares subject to possible redemption), as adjusted
|
|
|
1,150
|
|
|
|
3,800
|
|
|
Additional paid-in capital
|
|
|
23,850
|
|
|
|
21,488,793
|
|
|
Deficit accumulated during the development stage
|
|
|
(21,737
|
)
|
|
|
(21,737
|
)
|
|
Total shareholders’ equity
|
|
$
|
3,263
|
|
|
$
|
21,470,856
|
|
|
Total capitalization
|
|
$
|
284,924
|
|
|
$
|
31,454,848
|
|
|
|
(1)
|
Notes payable to affiliates are comprised of promissory notes issued in the amount of $281,661 to Robert Eu pursuant to a revolving credit line. The notes are due within 15 days following the consummation of this offering.
|
|
|
(2)
|
If the extended period is approved or we consummate a business combination, the redemption rights afforded to our public shareholders may result in the redemption for cash of up to one share less than 30.00% of the aggregate number of shares sold in this offering at a per-share redemption price equal to the aggregate amount then on deposit in the trust account (initially approximately $7.76 per share (which includes $0.24 per share attributable to the underwriter’s deferred discount), before payment of deferred underwriting discounts and commissions and including accrued interest, net of any income or franchise taxes due on such interest, which income and franchise taxes, if any, shall be paid from the trust account, and net of interest income previously released to us for working capital requirements, as of two business days prior to the proposed consummation of a business combination divided by the number of shares sold in this offering.
In the event that holders of more than 20% of the ordinary shares sold in this offering elect to redeem their shares, our existing shareholders have agreed to forfeit that number of shares (up to a maximum of 124,736) that will result in the number of shares owned by them prior to this offering collectively being no more than 23.81% of our outstanding ordinary shares immediately prior to the consummation of such business combination after giving effect to the redemption. The “As Adjusted” number assumes the underwriters have not exercised their over-allotment option and that 150,000 of the currently outstanding shares have been redeemed.
|
57
TABLE OF CONTENTS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a blank check company formed under the laws of the Cayman Islands on July 18, 2007. We were formed to acquire one or more operating businesses through a merger, stock exchange, asset acquisition or similar business combination or control through contractual arrangements having its primary operations in the PRC. We will not seek to acquire a business with its primary operations outside of the PRC. To date, our efforts have been limited to organizational activities. We do not have any specific business combination under current consideration, and we have not (nor has anyone on our behalf) contacted any potential target business, or had any
discussions, formal or otherwise, with respect to such transaction. We intend to effect a business combination using cash from the proceeds of this offering, our capital securities, debt or a combination of cash, capital securities and debt. The issuance of additional securities in a business combination:
|
|
•
|
may significantly reduce the equity interest of our shareholders;
|
|
|
•
|
may cause a change in control if a substantial number of ordinary shares are issued, and may also result in the resignation or removal of one or more of our officers and directors; and
|
|
|
•
|
may adversely affect prevailing market prices for our ordinary shares.
|
Similarly, debt securities issued by us in a business combination may result in:
|
|
•
|
default and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations;
|
|
|
•
|
acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contained covenants requiring the maintenance of certain financial ratios or reserves and any such covenant was breached without a waiver or renegotiation of that covenant;
|
|
|
•
|
our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and
|
|
|
•
|
our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additional financing while such debt security was outstanding.
|
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for this offering. Following this offering, we will not generate any operating revenues until consummation of a business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering.
Liquidity and Capital Resources
Our liquidity needs have been satisfied to date through receipt of $25,000 from the sale of 1,150,000 shares to our founders, and advances from our founders that are more fully described below. Please see “Description of Securities” for additional information concerning the founders shares. We estimate that the net proceeds from (i) the sale of the units in this offering, after deducting approximately $1.7 million to be applied to underwriting discounts, offering expenses and working capital and $960,000 of deferred underwriting discounts (or $1,104,000 if the underwriters’ over-allotment option is exercised in full) and (ii) the sale
of the private placement warrants for a purchase price of $1,150,000, will be $30.5 million (or $35.0 million if the underwriters’ over-allotment option is exercised in full). Approximately $31.0 million (or approximately $35.6 million if the underwriters’ over-allotment option is exercised in full), will be held in the trust account, which includes $960,000 (or $1,104,000 if the underwriters’ over-allotment option is exercised in full) of deferred underwriting discounts and commissions. The remaining $411,585 will not be held in the trust account. We have determined, based on a review of the trading price of the public warrants of other blank check companies similar to us, that the purchase price of $1.00 per private placement warrant would be not less than the approximate fair value of such warrants on the date of issuance. This belief is based upon the closing price of the public warrants for 22 blank check companies similar to ours with equivalent $8.00 unit prices
and $6.00 or less warrant exercise prices, which had an average closing price for their warrants of less
58
TABLE OF CONTENTS
than $0.90 on the 1st day and on the 30th day after separate trading of the warrants was initiated. Therefore, we will not record compensation expense upon the sale of the private placement warrants.
We will use substantially all of the net proceeds of this offering to acquire one or more target businesses, and will use a portion of the interest earned on the trust account together with the funds not held in trust to identify and evaluate prospective target businesses, to select one or more target businesses, and to structure, negotiate and consummate the business combination, as described in more detail in this prospectus. However, in the event that expenses exceeded available amounts outside of trust, such amounts could be accrued and paid out of the funds that were held in trust post business combination, assuming a business combination was
consummated. In the event that a business combination is not consummated, the amount of expenses that exceeded the funds available outside of trust would remain our liability and could result in our being sued by creditors to recover the costs of such expenses. If we were sued and the creditor had not signed an enforceable waiver, the amount available to be distributed to our public stockholders could be reduced. If the business combination is paid for using equity or debt securities, we may apply the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the acquired business or businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business combination, to fund the purchase of other companies, or for working capital.
Following consummation of this offering, we believe the funds available to us outside of the trust account, together with one-half of the interest income on the balance of the trust account (up to a maximum of $1,350,000) to be released to us from time to time for working capital requirements, will be sufficient to allow us to operate for at least the next 36 months, assuming a business combination is not completed during that time. We expect our primary liquidity requirements during that period to include approximately $450,000 for expenses for the due diligence and investigation of a target business or businesses, including the review of documents
and financial statements related to the applicable businesses, approximately $400,000 for legal, accounting and other expenses associated with structuring, negotiating and documenting an initial business combination, including the drafting of an acquisition document and the preparation of documents relating to the vote of our shareholders on the business combination; up to an aggregate of $270,000 for office space, administrative services and secretarial support payable to Hambrecht Eu Capital Management LLC, an affiliate of Robert Eu, one of our founders and our Chairman and Secretary, and Elizabeth Hambrecht, Mr. Eu’s wife, representing $7,500 per month for up to 36 months; $125,000 as a reserve for liquidation expenses; $100,000 for legal and accounting fees relating to our SEC reporting obligations; and approximately $416,585 for working capital and general corporate purposes that will be used for miscellaneous expenses (including directors and officers liability insurance)
and reserves. These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring a business combination based upon the level of complexity of that business combination. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would be deducted from our excess working capital. Any such funds not used for our working capital requirements or to repay advances from our founders or for due diligence or legal, accounting and non-due diligence expenses will be usable by us to pay other expenses that may exceed our current estimates. If our estimate of the costs of undertaking in-depth due diligence and
negotiating a business combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. In this event, we could seek such additional capital through loans or additional investments from our founders, or our directors and officers. None of such founders or our officers and directors are under any obligation to advance funds to, or invest in, us. Any such interest income not used to fund our working capital requirements or repay advances from our founders or for due diligence or legal, accounting and non-due diligence expenses will be usable by us to pay other expenses that may exceed our current estimates.
It is also possible that we could use a portion of our working capital, including the funds not in the trust account, to make a deposit, down payment or fund a “no-shop” provision with respect to a particular proposed business combination. In the event we were ultimately required to forfeit such funds, we may not have
59
TABLE OF CONTENTS
a sufficient amount of working capital available to pay expenses related to finding a suitable business combination without securing additional financing. If we were unable to secure additional financing, we would most likely fail to consummate a business combination in the allotted time and would be forced to liquidate.
We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, we may need to raise additional funds through a private offering of debt or equity securities if such funds were required to consummate a business combination. Such debt securities may include a working capital revolving debt facility or a longer term debt facility. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of a business combination.
On the closing of this offering we will issue to the representative of the underwriters, for $100, an option to purchase up to 280,000 units at $10.00 per unit. The units issuable upon exercise of this option are identical to those offered by this prospectus. This option commences on the later of the consummation of a business combination or 180-days from the date of this prospectus and expires five years from the date of this prospectus. We have determined, based upon a Black-Scholes option pricing formula, that the estimated fair value of the option on the date of sale would be approximately $3.36 per unit or an aggregate of approximately $940,912,
assuming an expected life of five years, volatility of 51.51% and a risk-free interest rate of 3.38%. Given the parameters used in the computation of the fair value of the option change over time, the actual fair value of the option on the date of sale is expected to be different from the estimated fair value computed above. The volatility calculation is based on the latest five year average volatility of 62 companies drawn from the Shanghai Stock Exchange Composite Index that had market capitalizations between $70 million and $150 million. Because we do not have a trading history, we estimated the potential volatility of our common stock price, which will depend on a number of factors which cannot be ascertained at this time. We used the annualized volatility of the daily historical volatilities for a period of time equal in length to the term of the option because we believe that the volatility of these companies is a reasonable benchmark to use in estimating the expected volatility
for our common stock post-business combination. Although an expected life of five years was taken into account for purposes of assigning a fair value to this option, if we do not consummate a business combination within the prescribed time period and liquidates, this option would become worthless.
Related Party Transaction
Robert Eu, our Chairman and Secretary, provided us with a $290,000 revolving credit line to pay certain expenses of this offering referenced in the line items above for the SEC registration fee, FINRA registration fee, blue sky legal and filing fees and accounting and legal fees and expenses. As of December 31, 2007, there was $281,661 outstanding under the credit line. These advances bear interest at a rate of 4% per year, are unsecured and are due within 15 days following the consummation of this offering. The loan will be repaid out of the proceeds of this offering.
60
TABLE OF CONTENTS
PROPOSED BUSINESS
Introduction
We are a recently organized Cayman Islands blank check company formed on July 18, 2007 to complete a business combination with one or more operating businesses that have its or their primary operations in the PRC. Our efforts in identifying a prospective target business will not be limited to a particular industry. We do not have any specific merger, stock exchange, asset acquisition or other business combination under consideration or contemplation and we have not, nor has anyone on our behalf, contacted, or been contacted by, any potential target business or had any discussions, formal or otherwise, with respect to such a transaction. To date our
efforts have been limited to organizational activities as well as activities related to this offering.
Opportunities in China
Opportunities for market expansion have emerged for businesses with operations in China due to certain changes in the PRC’s political, economic and social policies as well as certain fundamental changes affecting the PRC and his neighboring countries. We believe that China represents both a favorable environment for making acquisitions and an attractive operating environment for a target business for several reasons, including:
|
|
•
|
prolonged economic expansion within China, including gross domestic product growth of approximately 9% on average over the last 25 years, including 9.5% in 2004, 9.9% in 2005 and 10.7% in the first three quarters of 2006 (National Bureau of Statistics of China) (China Statistical Yearbook – 2006, http://www.stats.gov.cn/tjsj/ndsj/2006/indexeh.htm, viewed October 29, 2007);
|
|
|
•
|
increased government focus within China on privatizing assets, improving foreign trade and encouraging business and economic activity;
|
|
|
•
|
favorable labor rates and efficient, low-cost manufacturing capabilities (for example, according to the Chinese National Bureau of Statistics, the 2005 average annual wage in China is 18,364RMB ($2,416) while the average annual wage in the US is $65,000 (China Statistical Yearbook – 2006, http://www.stats.gov.cn/tjsj/ndsj/2006/indexeh.htm, viewed October 29, 2007));
|
|
|
•
|
the recent entry of China into the World Trade Organization, the sole global international organization dealing with the rules of trade between nations, which may lead to a reduction on tariffs for industrial products, a reduction in trade restrictions and an increase in trading with the United States; and
|
|
|
•
|
the fact that China’s public equity markets are not as well developed and active as the equity markets within the United States and are characterized by companies with relatively small market capitalizations and low trading volumes, thereby causing Chinese companies to attempt to be listed on the United States equity markets (for example, significantly less equity capital is raised in China and Hong Kong than the United States and average daily trading volume of the Chinese Stock Market is significantly less than the Nasdaq Stock Market or S&P 500 (Thomson One, October 5, 2007)).
|
We believe that these factors and others should enable us to acquire a target business with growth potential on favorable terms.
Management Expertise
Our officers and directors have substantial experience in acquiring and operating a wide variety of businesses and as financial advisors to companies in many different industries internationally. Robert Eu, John Wang and Lee Ting also have significant private equity experience. Robert Eu, our Chairman of the board and Secretary, Stephen N. Cannon, our Chief Financial Officer and director and Lee S. Ting, our director, all serve as managing directors at W.R. Hambrecht + Co., LLC, an investment banking firm committed to using technology and auction processes to help clients use the market to determine pricing and allocation of its public equity
offerings. W.R. Hambrecht + Co., LLC provides underwriting and advisory services for Asian, consumer, healthcare, technology and other emerging growth companies, as well as equity research, sales and trading, full-service and online brokerage serving over 10,000 retail clients and private equity offerings for
61
TABLE OF CONTENTS
institutions and individuals. Messrs. Eu and Cannon also serve as managing directors at WRH+Co Asia, a division of WRH+Co. WRH+Co Asia has completed over 20 cross-border equity and advisory transactions while serving both as a underwriter and financial advisor. In addition, John Wang, our Chief Executive Officer, president and director and Feng Zhang, our consultant, serve as executives of Marbella Capital Partners Ltd., a financial services firm engaged in business advisory, financial advisory and capital markets services. Marbella Capital Partners has assisted approximately six China-based companies in raising over $200 million since 2004 including
Tian Wei Yingli Solar which recently completed its initial public offering and listing on the New York Stock Exchange.
Government regulations
Government regulations relating to foreign exchange controls
The principal regulation governing foreign exchange in China is the Foreign Currency Administration Rules (IPPS), as amended. Under these rules, the Renminbi, China’s currency, is freely convertible for trade and service related foreign exchange transactions (such as normal purchases and sales of goods and services from providers in foreign countries), but not for direct investment, loan or investment in securities outside of China without the prior approval of the State Administration for Foreign Exchange (“SAFE”) of China. Foreign investment enterprises (“FIEs”) are required to apply to the SAFE for “Foreign Exchange
Registration Certificates for FIEs.” Following a business combination, involving a change of equity ownership of a PRC operating entity or through contractual arrangements with a PRC operating entity our subsidiary will likely be an FIE as a result of our ownership structure. With such registration certificates, which need to be renewed annually, FIEs are allowed to open foreign currency accounts including a “basic account” and “capital account.” Currency translation within the scope of the “basic account,” such as remittance of foreign currencies for payment of dividends, can be effected without requiring the approval of the SAFE. However, conversion of currency in the “capital account,” including capital items such as direct investment, loans and securities, still require approval of the SAFE. This prior approval may delay or impair our ability to operate following a business combination. On November 21, 2005, the SAFE issued Circular No.
75 on “Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Corporate Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles.” Circular No. 75 confirms that the use of offshore special purpose vehicles as holding companies for PRC investments are permitted as long as proper foreign exchange registrations are made with the SAFE.
Government regulations relating to taxation
According to the PRC income Tax Law of Foreign Investment Enterprises and Foreign Enterprises and the Implementation Rules for the Income Tax Law, the standard Enterprise Income Tax (“EIT”) rate of FIEs is 33%, reduced or exempted in some cases under any applicable laws or regulations. Income such as dividends and profits derived from the PRC by a foreign enterprise which has no establishment in the PRC is subject to a 20% withholding tax, unless reduced or exempted by any applicable laws or regulations. The profit derived by a foreign investor from a FIE is currently exempted from EIT. However, if this exemption were to be removed in the
future, we might be required to deduct certain amounts from dividends we may pay to our shareholders following a business combination to pay corporate withholding taxes.
Effecting a Business Combination
General
We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following this offering. We intend to utilize the cash proceeds of this offering and the private placement, our capital securities, debt or a combination of these as the consideration to be paid in a business combination. While substantially all of the net proceeds of this offering are allocated to completing a business combination, the proceeds are not otherwise designated for more specific purposes. Accordingly, prospective investors will at the time of their investment in us not be provided an opportunity to evaluate the specific merits or
risks of one or more target businesses. If the business combination is paid for using equity or debt securities, we may apply the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the acquired business or businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business combination, to fund
62
TABLE OF CONTENTS
the purchase of other companies, or for working capital. We may engage in a business combination with a company that does not require significant additional capital but is seeking a public trading market for its shares and that wants to merge with an already public company to add the experience of the public company's management team to its company and to avoid the risk that market conditions will not be favorable for an initial public offering at the time this offering is ready to be sold, despite the fact that merging with us would require similar disclosures and, potentially, a similar timeframe as an initial public offering. We may seek to effect
a business combination with more than one target business, although our limited resources may serve as a practical limitation on our ability to do so.
We do not have any specific business combination under consideration, and we have not (nor has anyone on our behalf) contacted any potential target business or had any discussions, formal or otherwise, with respect to such a transaction. We have not (nor have any of our agents or affiliates) been approached by any candidates (or representative of any candidates) with respect to a possible acquisition transaction with our company. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative
to identify or locate any such acquisition candidate.
Prior to consummation of a business combination, we will seek to have all vendors, prospective target businesses or other entities that we may engage, which we refer to as potential contracted parties or a potential contracted party, execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders. There is no assurance that we will be able to get waivers from our vendors and there is no assurance that such waivers will be enforceable by operation of law or that creditors would be prevented from bringing claims against the trust. In the event
that a potential contracted party were to refuse to execute such a waiver, we will execute an agreement with that entity only if our management first determines that we would be unable to obtain, on a reasonable basis, substantially similar services or opportunities from another entity willing to execute such a waiver. Examples of instances where we may engage a third party that refused to execute a waiver would be the engagement of a third party consultant whose particular expertise or skills are believed by management to be superior to those of other consultants that would agree to execute a waiver or a situation where management does not believe it would be able to find a provider of required services willing to provide the waiver. If we are unable to complete a business combination and are forced to dissolve and liquidate, each of John Wang, Robert Eu, and Stephen N. Cannon will, by agreement, be personally liable (each in an amount proportional to the number of shares owned as
compared to all of them as a group) to ensure that the proceeds in the trust account are not reduced by the claims of prospective target businesses, vendors or other entities that are owed money by us for services rendered or products sold to us. Under these circumstances, our board of directors would have a fiduciary obligation to our shareholders to bring a claim against Messrs. Wang, Eu and Cannon to enforce their liability obligation.
Subject to the requirement that a target business or businesses have a fair market value of at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) at the time of our initial business combination, we have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses. Accordingly, there is no current basis for investors in this offering to evaluate the possible merits or risks of the target business with which we may ultimately
complete a business combination. Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
We intend to focus on potential target businesses with valuations between $70 million and $150 million. We believe that our available working capital following this offering, together with the issuance of additional equity and/or the issuance of debt, would support the acquisition of such a target business. The mix of additional equity and/or debt would depend on many factors. The proposed funding for any such business combination would be disclosed in the proxy statement relating to the required shareholder approval.
63
TABLE OF CONTENTS
Sources of target businesses
We anticipate that target businesses may be brought to our attention from various unaffiliated parties such as investment banking firms, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and similar sources. Our officers, directors and advisor(s), as well as their affiliates may also bring to our attention target business candidates. After this offering is complete, our management team will speak to their various contacts to inform them that we are seeking a target business and request any information that they have for suitable targets. In addition, we expect that once our initial public offering is
complete that we will receive unsolicited information about potential targets from those who are aware of the blank-check market and have noted (either through publications or a monitoring of the SEC's web site) that we have completed our initial public offering. We will not acquire an entity that is either a portfolio company of, or has otherwise received a financial investment from, our founders or their affiliates. Neither we, nor our directors have given, or will give, any consideration to entering into a business combination with companies affiliated with our founders or our directors.
We may pay fees or compensation to third parties for their efforts in introducing us to potential target businesses. We may seek to engage someone to assist in finding a potential target business if our management feels that they need assistance to find a suitable target business. If a finder approaches us on an unsolicited basis, our management would decide whether to work with that finder (and pay a finders' fee) depending on the potential target business such finder proposes. Such payments are typically, although not always, calculated as a percentage of the dollar value of the transaction. We have not anticipated use of a particular percentage
fee, but instead will seek to negotiate the smallest reasonable percentage fee consistent with the attractiveness of the opportunity and the alternatives, if any, that are then available to us. We may make such payments to entities we engage for this purpose or entities that approach us on an unsolicited basis. Payment of finders’ fees is customarily tied to consummation of a transaction and certainly would be tied to a completed transaction in the case of an unsolicited proposal. Although it is possible that we may pay finders’ fees in the case of an uncompleted transaction, we consider this possibility to be extremely remote. In no event will we pay any of our directors or officers or any entity with which they are affiliated any finder’s fee or other compensation for services rendered to us prior to or in connection with the consummation of a business combination. In addition, none of our officers or directors will receive any finder’s fee, consulting fees or any
similar fees from any person or entity in connection with any business combination involving us. Following such business combination, however, our officers or directors may receive compensation or fees including compensation approved by the board of directors for customary director’s fees for our directors that remain following such business combination. Our directors have advised us that they will not take an offer regarding their compensation or fees following a business combination into consideration when determining which target businesses to pursue.
Selection of a target business and structuring of a business combination
Subject to the requirement that our initial business combination must be with a target business with a fair market value that is at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) at the time of such business combination, our management will have virtually unrestricted flexibility in identifying and selecting a prospective target business.
We anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business. We may, however, structure a business combination to acquire less than 100% of such interests or assets of the target business but will not acquire less than a controlling interest (which would be at least 51% of the voting securities of the target business). If we acquire only a controlling interest in a target business or businesses, the portion of such business that we acquire must have a fair market value equal to at least 80% of the amount in the trust account, (excluding deferred underwriting discounts and commissions and
taxes payable), as described above. If we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of his business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect to possible multiple
64
TABLE OF CONTENTS
negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent integration of the operations and services or products of the acquired companies in a single operating business.
We intend to acquire an operating business through a stock exchange, asset acquisition or other similar business combination; however, there are a number of industries in China in which direct foreign investment is restricted (including telecommunications services, online commerce and advertising). Therefore, if our target business is an industry that is subject to these requirements we may seek to acquire control of our target business through contractual arrangements with licensed companies operating in China and their owners, as described below.
We will not consider any transaction that does not meet the above described criteria.
In evaluating a prospective target business, our management will primarily consider the criteria and guidelines set forth above under the caption “Proposed Business — Business Strategy.” In addition, our management will consider, among other factors, the following:
|
|
•
|
financial condition and results of operations;
|
|
|
•
|
brand recognition and potential;
|
|
|
•
|
experience and skill of management and availability of additional personnel;
|
|
|
•
|
barriers to entry by competitors;
|
|
|
•
|
stage of development of the business and its products or services;
|
|
|
•
|
existing distribution arrangements and the potential for expansion;
|
|
|
•
|
degree of current or potential market acceptance of the products or services;
|
|
|
•
|
proprietary aspects of products and the extent of intellectual property or other protection for products or formulas;
|
|
|
•
|
impact of regulation on the business;
|
|
|
•
|
regulatory environment of the industry;
|
|
|
•
|
seasonal sales fluctuations and the ability to offset these fluctuations through other business combinations, introduction of new products, or product line extensions; and
|
|
|
•
|
costs associated with effecting the business combination.
|
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management to our business objective. In evaluating a prospective target business, we expect to conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as review of financial and other information which will be made available to us.
The time required to select and evaluate a target business and to structure and complete the business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
65
TABLE OF CONTENTS
Contractual arrangements
The government of the PRC has restricted or limited foreign ownership of certain kinds of assets and companies operating in a wide variety of industries, including certain aspects of telecommunications, advertising, food production, and heavy equipment manufacturing. The PRC may apply these restrictions in other industries in the future. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time to time by the PRC to be in “important industries” that may affect the national economic security or that relate to “famous Chinese brand names” or “well established Chinese brand
names.” Subject to the review requirements of the Ministry of Commerce and other relevant PRC agencies, as discussed elsewhere, with respect to acquisitions of assets and companies in the PRC and subject to the various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors and parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual arrangements with permitted Chinese parties. To the extent that such agreements are employed, they may be for control of specific assets such as intellectual property or control of blocks of the equity ownership interests of a company. The agreements would be designed to provide our company with the economic benefits, and control over the subject assets or equity interests, similar to the rights of full ownership, while leaving the technical ownership in the hands of Chinese parties who would likely be designated by our company.
These arrangements would also result in our assuming the economic risks associated with the target business. Therefore, through these arrangements, we would, from an economic basis, assume substantially all the benefits and risks of the portion of the target business, we acquired (which would be no less than a controlling interest), just as we would if we acquired that portion of the business outright.
For example, these contracts could result in a structure where, in exchange for our payment of the acquisition consideration, (i) the target company would be majority owned by Chinese residents whom we designate and the target company would continue to hold the requisite licenses for the target business, and (ii) we would establish a new subsidiary in China which would provide management, technology, technical support, consulting and related services to the target company in exchange for fees, which would transfer to us substantially all of the economic, management and control benefits of ownership of the target company.
These contractual arrangements would be designed to provide us the following:
|
|
•
|
Our exercise of effective control over the target company;
|
|
|
•
|
Substantially all of the economic benefits and the economic risks of the portion of the target company we acquired (which would be no less than a controlling interest); and
|
|
|
•
|
An exclusive option to purchase all or part of the equity interests in the target company owned by the Chinese residents whom we designate, or all or part of the assets of the target company, in each case when and to the extent permitted by Chinese regulations.
|
While we cannot predict the terms of any such contract, at a minimum, any contractual arrangement would need to provide us with (i) effective control over the target’s operations and management either directly through board control or through affirmative and/or negative covenants and veto rights with respect to various material matters, such as entry into material agreements, management changes and issuance of debt or equity securities, among other potential control provisions and (ii) a sufficient level of economic interest to ensure that we satisfy the 80% net asset test required for our initial business combination. We have not, however,
established specific provisions which must be in any potential contractual arrangement in order to meet the definition of business combination. We intend to obtain an independent appraisal from an investment bank or industry expert for the purpose of determining the fair value of any contractual arrangement.
It is also possible that we would have to seek the approval of various Chinese regulatory authorities in connection with entering into such arrangements. However, because we have not yet selected a target industry, we are not able to determine the nature of the approvals that would be required.
These agreements likely would also provide for increased or full ownership and control by us when and if permitted under PRC law and regulation. If we choose to effect a business combination that employs the use of these types of control arrangements, we may have difficulty in enforcing our rights. Therefore these contractual arrangements may not be as effective in providing us with the same economic benefits, accounting consolidation or control over a target business as would direct ownership through a merger or stock exchange.
66
TABLE OF CONTENTS
For example, if the target business or any other entity fails to perform its obligations under these contractual arrangements, we may have to incur substantial costs and expend substantial resources to enforce such arrangements, and rely on legal remedies under Chinese law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure will be sufficient to offset the cost of enforcement and may adversely affect the benefits we expect to receive from the business combination.
Moreover, we expect that the contractual arrangements upon which we would be relying would be governed by Chinese law and would be the only basis of providing resolution of disputes which may arise. Accordingly, these contracts would be interpreted in accordance with Chinese law and any disputes would be resolved in accordance with Chinese legal procedures. Uncertainties in the Chinese legal system could limit our ability to enforce these contractual arrangements. In the event we are unable to enforce these contractual arrangements, we may not be able to exert the effective level of control over the target business.
We have not selected any target business or target industry on which to concentrate our search for a business combination and we are, therefore, unable to determine at this time what form an acquisition of a target business will take.
Fair market value of target business or businesses
The initial target business or businesses with which we combine must have a collective fair market value equal to at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) at the time of such business combination.
The fair market value of a target business or businesses will be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential sales, the values of comparable businesses, earnings and cash flow, and book value. If our board is not able to independently determine that the target business has a sufficient fair market value to meet the threshold criterion, or if we acquire control through contractual arrangement, we will obtain an opinion from an unaffiliated, independent investment banking firm which is a member of FINRA with respect to the satisfaction of such criterion. Any such
opinion will be included in our proxy soliciting materials furnished to our shareholders in connection with a business combination, and that such independent investment banking firm will be a consenting expert. We will not be required to obtain an opinion from an investment banking firm as to the fair market value of the business if our board of directors independently determines that the target business or businesses has sufficient fair market value to meet the threshold criterion.
Although there is no limitation on our ability to raise funds privately or through loans that would allow us to acquire a company with a fair market value greater than 80% of the balance in the trust account, no such financing arrangements have been entered into or contemplated with any third parties to raise such additional funds through the sale of securities or otherwise.
Issuance of additional debt or equity
Although we may not do so, we intend to focus on potential target businesses with valuations between $70 million and $150 million. We determined to value this offering at $32 million in order to facilitate a transaction in our targeted range. We believe that our available working capital following this offering would support the acquisition of such a target business. To consummate such an acquisition we would need to issue additional equity securities and/or incur additional debt financing. As the valuation of the proposed target business moves from the lower end to the higher end of that range, a greater amount of such additional equity or debt
would be required. The mix of debt or equity would be dependent on the nature of the potential target business, including its historical and projected cash flow and its projected capital needs and the number of our shareholders who exercise their redemption rights. It would also depend on general market conditions at the time including prevailing interest rates and debt to equity coverage ratios. For example, capital intensive businesses usually require more equity and mature businesses with steady historical cash flow may sustain higher debt levels than growth companies.
We believe that it is typical for private equity firms and other financial buyers to use leverage to acquire operating businesses. Such debt is often in the form of both senior secured debt as well as subordinated debt, which may be available from a variety of sources. Banks and other financial institutions may provide senior or
67
TABLE OF CONTENTS
senior secured debt based on the target company’s cash flow. Mezzanine debt funds or similar investment vehicles may provide additional funding on a basis that is subordinate to the senior or secured lenders. Such instruments typically carry higher interest rates and are often accompanied by equity coverage such as warrants. We cannot assure you that such financing would be available on acceptable terms, if at all. The proposed funding for any such business combination would be disclosed in the proxy statement relating to the required shareholder approval.
Lack of business diversification
While we may seek to effect business combinations with more than one target business, our initial business combination must be with one or more target businesses whose collective fair market value is at least equal to 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) at the time of such business combination, as discussed above. Consequently, we expect to complete only a single business combination, although this may entail a simultaneous combination with several operating
businesses at the same time. At the time of our initial business combination, we may not be able to acquire more than one target business because of various factors, including complex accounting or financial reporting issues. For example, we may need to present pro forma financial statements reflecting the operations of several target businesses as if they had been combined historically.
A simultaneous combination with several target businesses also presents logistical issues such as the need to coordinate the timing of negotiations, proxy statement disclosure and closings. In addition, if conditions to closings with respect to one or more of the target businesses are not satisfied, the fair market value of the business could fall below the required fair market value threshold of 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable).
Accordingly, while it is possible that we may attempt to effect our initial business combination with more than one target business, we are more likely to choose a single target business if all other factors appear equal. This means that for an indefinite period of time, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By
consummating a business combination with only a single entity, our lack of diversification may:
|
|
•
|
subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after a business combination, and
|
|
|
•
|
cause us to depend on the marketing and sale of a single product or limited number of products or services.
|
If we complete a business combination structured as a merger in which the consideration is our securtities, we would have a significant amount of cash available to make add-on acquisitions following our initial business combination.
Limited ability to evaluate the target business’ management
Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting a business combination with that business, we cannot assure you that our assessment of the target business’ management will prove to be correct. In addition, we cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our directors, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with
us following a business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to a business combination. Moreover, we cannot assure you that our directors will have significant experience or knowledge relating to the operations of the particular target business.
Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit
68
TABLE OF CONTENTS
additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Limited available information for privately-held target companies
In accordance with our acquisition strategy, it is quite possible that we will likely seek a business combination with one or more privately-held companies. Generally, very little public information exists about these companies, and we will be required to rely on the ability of our directors to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, then we may not make a fully informed investment decision, and we may lose money on our investments.
Limited resources and significant competition for business combinations
We will encounter intense competition from entities having a business objective similar to ours, including private equity groups and leveraged buyout funds, as well as operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience in identifying and completing business combinations. A number of these competitors possess greater technical, financial, human and other resources than we do. Our limited financial resources may have a negative effect on our ability to compete in acquiring certain sizable target businesses. Further, because we must obtain shareholder approval of a business
combination, this may delay the consummation of a transaction, while our obligation to redeem for cash the ordinary shares held by public shareholders who elect redemption may reduce the financial resources available for a business combination. Our outstanding warrants and the future dilution they potentially represent may not be viewed favorably by certain target businesses. In addition, if our initial business combination entails a simultaneous purchase of several operating businesses owned by different sellers, we may be unable to coordinate a simultaneous closing of the purchases. This may result in a target business seeking a different buyer and our being unable to meet the threshold requirement that the target business has, or target businesses collectively have, a fair market value equal to at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment
option is exercised in full and taxes payable) at the time of such combination.
Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. We cannot assure you that we will be able to successfully compete for an attractive business combination. Additionally, because of these factors, we cannot assure you that we will be able to effectuate a business combination within the required time periods. If we are unable to find a suitable target business within such time periods, we will dissolve and liquidate.
Opportunity for shareholder approval of business combination
Prior to the consummation of our initial business combination, we will submit the transaction to our shareholders for approval, even if the nature of the acquisition is such as would not ordinarily require shareholder approval under applicable Cayman Islands law. If a majority of the ordinary shares voted by the public shareholders are not voted in favor of a proposed initial business combination, we may continue to seek other target businesses with which to effect our initial business combination that meet the criteria set forth in this prospectus until the expiration of 18 months from consummation of this offering (or 24 months if a letter of
intent, agreement in principle or definitive agreement has been executed within such 18 month period but as to which a combination is not yet complete, or by the extended date). In connection with seeking shareholder approval of a business combination, we will furnish our shareholders with proxy solicitation materials prepared in accordance with the Exchange Act, which, among other matters, will include a description of the operations of the target business and audited historical financial statements of the target business based on United States generally accepted accounting principles.
In connection with the vote required for any business combination, our founding securityholders have agreed to vote their ordinary shares acquired prior to this offering in accordance with the majority of the ordinary shares voted by the public shareholders. As a result, if a majority of the ordinary shares voted by the public shareholders are voted for the business combination, our founding securityholders may not exercise their redemption rights with respect to ordinary shares acquired before this offering. Each of our founders has also agreed that he will vote any shares it purchases in the open market in or after this offering in favor of a
69
TABLE OF CONTENTS
business combination. As a result, if our founders acquire shares in or after this offering, they must vote those shares in favor of the proposed initial business combination with respect to those shares, and will therefore not be eligible to exercise redemption rights for those shares. We will proceed with the business combination only if a majority of the ordinary shares voted by the public shareholders are voted in favor of the business combination and public shareholders owning one share less than 30.0% of the aggregate shares sold in this offering exercise their redemption rights on a cumulative basis, including any shareholders who previously
exercised their redemption rights in connection with the shareholder vote required to approve the extended period. Voting against the business combination alone will not result in redemption of a shareholder’s shares for a pro rata share of the trust account. To do so, a shareholder must have also exercised the redemption rights described below. In addition, if within 90 days before the expiration of such the 24 month period, we seek approval from our shareholders of the extended period, or within 90 days before the 24 or 36 month period, as the case may be, we seek approval from our shareholders to consummate a business combination, the proxy statement related to such business combination will also seek shareholder approval for our board’s recommended dissolution and plan of distribution in the event our shareholders do not approve the extended period or the business combination or if the business combination is not consummated for other reasons. The requirements that we
seek shareholder approval before effecting our initial business combination and not consummate our initial business combination if public shareholders owning 30.0% or more of the shares sold in this offering exercise their redemption rights below (on a cumulative basis), are set forth in Article 170 of our articles of association, which requires, the affirmative vote of at least 80% of the voting power of our outstanding ordinary shares to amend. Management will not request that the board consider such a proposal to eliminate or amend this provision. In addition, we will not seek shareholder approval to extend the 36 month period.
In the event that holders of more than 20% of the ordinary shares sold in this offering elect to redeem their shares, our existing shareholders have agreed to forfeit that number of shares (up to a maximum of 124,736) that will result in the number of shares owned by them prior to this offering collectively being no more than 23.81% of our outstanding ordinary shares immediately prior to the consummation of such business combination after giving effect to the redemption.
Extension of time to complete a business combination to 36 months
We have a period of 18 months from the consummation of this offering with which to effect our initial business combination, with an additional six-month period (or a total of 24 months) if a letter of intent, agreement in principle or definitive agreement has been executed within such 18 month period but as to which the combination is not yet complete. However, unlike most other blank check companies, if we have entered into such letter of intent, agreement in principle or definitive agreement within such 18 month period, we may, prior to the expiration of the 24 months period, call a special meeting of our shareholders for the purpose of soliciting
their approval to extend by an additional twelve months, the date before which we must complete our business combination, to avoid being required to liquidate, for a total of 36 months from the consummation of this offering.
We believe that extending the date before which we must complete our business combination to 36 months may be necessary due to the circumstances involved in the evaluation and closing of a business combination in China, including obtaining audited financial statements of potential targets that have previously kept their accounts in accordance with an accounting standard not accepted in the United States, the possible need for restructuring and reorganizing corporate entities and assets (particularly with respect to state-owned enterprises) and the requirements of complex Chinese regulatory filings and approvals. If we enter into such agreement near
the end of this 18 month period, we would have only six months in which to accomplish the necessary accounting reconciliations, complete the restructuring of the company, satisfy U.S. and PRC regulatory requirements, secure the approval of our shareholders and provide for customary closing conditions.
While such two-year period may be sufficient to accomplish all of these necessary tasks prior to effectuating the business combination, if, in the course of this process, we estimate that it is insufficient, we may, pursuant to our articles of association, call a special meeting of our shareholders for the purpose of extending by additional 12 months, the date before which we must complete our business combination, to avoid being required to liquidate, for a total of 36 months from the consummation of this offering.
70
TABLE OF CONTENTS
If holders of 30.0% or more of the shares sold in this offering that are voted against the proposed extension to 36 months and elect to redeem their shares for a pro rata share of the trust account, we will not extend the date before which we must complete our business combination beyond 24 months. In such event, if we cannot complete the initial business combination within such 24 month period, we will be required to liquidate, with the amount remaining in the trust account returned to all public shareholders. Subject to the foregoing, approval of the extension to 36 months will require the affirmative vote of the majority of public shareholders who
vote at the special meeting called for the purpose of approving such extension.
If the majority of public shareholders who vote at the special meeting called for the purpose of approving such extension vote in favor of such extension and holders of 30.0% or more of the shares sold in this offering do not vote against the proposed extension and elect to redeem their shares, we will then have an additional 12 months with which to complete the initial business combination.
If the proposal for the extension to 36 months is approved, we will still be required to seek shareholder approval before effectuating our initial business combination, even if the business combination would not ordinarily require shareholder approval under applicable law. Unless a shareholder voted against the proposal to extend to 36 months and exercised such shareholders redemption rights, all shareholders will be able to vote on the initial business combination. We will consummate our initial business combination only if a majority of the ordinary shares voted by the public shareholders are voted in favor of our initial business combination and
public shareholders owning 30.0% or more of the shares sold in this offering, on a cumulative basis, including any shareholders who previously exercised their redemption rights in connection with the special meeting of shareholders called for the purpose of approving the extended period, if any, do not exercise their redemption rights, as described below.
If at the end of such 36 month period we have not effected such business combination, we will dissolve as promptly as practicable and liquidate and release only to our public shareholders, as part of our plan of distribution, the proceeds of the trust account, including accrued interest, net of income and franchise taxes payable on such interest and net of the interest income previously released to us to fund our working capital requirements.
Redemption rights for shareholders voting to reject the extended period or our initial business combination
Public shareholders voting against the extended period or our initial business combination, as the case may be, will be entitled to cause us to redeem their ordinary shares for a pro rata share of the aggregate amount then in the trust account, before payment of deferred underwriting discounts and commissions and including interest earned on their pro rata portion of the trust account, net of income and franchise taxes payable on such interest and net of the interest income on the trust account balance previously released to us to fund our working capital and general corporate requirements. Shareholders voting against (i) the extended period will
only have the right to cause us to redeem their shares if the extended period is approved and (ii) the business combination will only have the right to cause us to redeem their shares if our initial business combination is approved and completed. Public shareholders who cause us to redeem their ordinary shares for a pro rata share of the trust account will be paid their redemption price as promptly as practicable after the date of the special meeting for the extended period or upon consummation of a business combination, as the case may be, and will continue to have the right to exercise any warrants they own.
The actual per-share redemption price in each case will be equal to the aggregate amount then on deposit in the trust account, including deferred underwriting discounts and commissions and including accrued interest, net of any income and franchise taxes on such interest, which shall be paid from the trust account, and net of the interest income earned on the trust account and released to us (one-half of the interest earned, up to a maximum of $1,350,000) to fund our working capital requirements (calculated as of the date of the special meeting of shareholders approving the extended period or two business days prior to the consummation of the
proposed business combination, as the case may be), divided by the number of shares sold in this offering. The initial per-share redemption price in both cases would be approximately $7.76, or $0.24 less than the per-share offering price of $8.00 (assuming that the entire purchase price of the units was allocated to the ordinary shares). The proceeds held in the trust account may be subject to claims which would take priority over the claims of our public shareholders and, as a result, the per-share liquidation price could be less than $7.76 due to claims of such creditors. Because our founding shareholder and founders have agreed to vote
71
TABLE OF CONTENTS
their shares for the extended period and business combination, they have forfeited any right to cause us to redeem any shares owned by them (regardless of when acquired) in connection with the extended period or our initial business combination.
An eligible shareholder may request redemption at any time after the mailing to our shareholders of the proxy statement and prior to the vote taken with respect to the extended period or a proposed business combination, but the request will not be granted unless the shareholder votes against the extension or business combination and the extension or business combination is approved and, in the case of the business combination, is consummated. If a shareholder votes against the business combination or extension but fails to properly exercise such shareholder’s redemption rights, such shareholder will not have its ordinary shares redeemed for its
pro ratadistribution of the trust account. A shareholder must mark the appropriate box on the proxy card that we provide that it wishes to vote against the proposed business combination and mark an additional box indicating that the shareholder wishes to redeem its shares in order for the shareholder to exercise the shareholder's redemption rights. If both boxes are not checked, the redemption will not be considered to be validly effected. Any request for redemption, once made, may be withdrawn at any time up to the date of the applicable meeting. After the meeting, if the business combination is approved and consummated, we will request information from our shareholders about where payments are to be made and that investors submit their securities to our transfer agent (which may result in our shareholders being required to pay a nominal fee for such transfer). We will not ask our shareholders to submit their securities to our transfer agent prior to the consummation of a business
combination. The funds to be distributed to shareholders who elect redemption will be distributed as promptly as practicable after the special meeting of shareholders approving the extended period or after the consummation of the business combination. Public shareholders who cause us to redeem their ordinary shares into their share of the trust account will still have the right to exercise the warrants that they received as part of the units. We will not complete our proposed initial business combination, and similarly will not extend the time to complete the business combination to 36 months, if public shareholders owning 30.0% or more of the shares sold in this offering exercise their redemption rights with respect to the extended period or on a cumulative basis, in the case of the business combination. We intend to structure and consummate any potential business combination in a manner such that an aggregate of 30.0% of our public shareholders could cause us to redeem their ordinary
shares for a pro ratashare of the aggregate amount then on deposit in the trust account, and the business combination could still go forward. There are a few other offerings similar to ours which include redemption provisions greater than 20%. We have increased the redemption percentage to 30.0% from the more typical 20% in order to reduce the likelihood that a small group of investors holding a large block of our ordinary shares will be able to stop us from completing a business combination that is otherwise approved by a large majority of our public shareholders and to be competitive with other offerings by blank check companies currently in the market.
If our business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many shareholders may exercise their redemption rights, we may either need to reserve part of the trust account for possible payment upon such redemption, or we may need to arrange third party financing to help fund our business combination in case a larger percentage of shareholders exercise their redemption rights than we expect. Therefore, we may not be able to consummate a business combination that requires us to use all of the funds held in the trust account as part of the purchase price, or we may end up having to
adjust the ratio of cash to securities used as consideration, or we may need to arrange for third party financing, if available.
The initial redemption price will be approximately $7.76 per share. As this amount is lower than the $8.00 per share offering price (assuming that the entire purchase price of the units was allocated to the ordinary shares) and it may be less than the market price of the ordinary shares on the date of redemption, there may be a disincentive on the part of public shareholders to exercise their redemption rights.
Notwithstanding the foregoing, our Amended and Restated Memorandum and Articles of Association provides a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined under Section 13 of Securities and Exchange Act of 1934, as amended), will be restricted from seeking redemption rights with respect to an aggregate of more than 10% of the shares sold in this offering (but only with respect to the amount over 10% of the shares sold in this offering). Such a public shareholder would still be entitled to vote against a proposed business combination or the extended
72
TABLE OF CONTENTS
period, as applicable, with respect to all shares owned by such holder or such holder’s affiliates. We believe this restriction will discourage shareholders from accumulating large blocks of shares before the votes on either our proposed extended period or a proposed business combination in an attempt by such holders to use their redemption right as a means to force us or our management to purchase their shares at a significant premium to the then current market price or on other undesirable terms. Absent this provision, a public shareholder holding more than 10% of the shares sold in this offering could threaten to vote against a proposed
business combination or the extended period and seek redemption, regardless of the merits of the transaction, if such holder’s shares are not purchased by us or our management at a premium to the then current market price or on other undesirable terms. By limiting our shareholders’ ability to cause us to redeem only an aggregate of 10% of the shares sold in this offering per shareholder or group, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block a transaction which is favored by our other public shareholders. However, nothing in our Amended and Restated Memorandum and Articles of Association or otherwise restricts the ability of any public shareholder from voting all of their shares against a proposed business combination or the extended period.
Dissolution and liquidation if no business combination
Pursuant to the terms of the trust agreement between us and Continental Stock Transfer & Trust Company, if we do not complete a business combination within 18 months after the consummation of this offering, or within 24 or 36 months if the extension criteria described below have been satisfied, we will dissolve and as promptly as practicable return and liquidate all funds from our trust account only to our public shareholders, as part of our dissolution and plan of distribution and in accordance with the applicable provisions of the Cayman Islands law. The liquidating distribution to public shareholders will consist of an aggregate sum equal to
the amount in the trust fund, inclusive of any interest not previously released to us, less the amount of taxes paid or payable, if any, on interest earned and all deferred underwriting discounts and commissions, plus any remaining net assets, and will be made in proportion to our public shareholders’ respective equity interests. In the event we seek shareholder approval for our dissolution and plan of distribution and do not obtain such approval and in the event we seek shareholder approval to extend the time to complete the business combination to 36 months and do not obtain such approval, we will nonetheless continue to pursue shareholder approval for our dissolution. Pursuant to the terms of our articles of association, our powers following the expiration of the permitted time periods for consummating a business combination will automatically thereafter be limited to acts and activities relating to dissolving and winding up our affairs, including liquidation. Pursuant to the
trust agreement governing such funds, the funds held in our trust account may not be distributed except upon our dissolution and, unless and until such approval is obtained from our shareholders, the funds held in our trust account will not be released (other than in connection with the funding of working capital, a redemption or a business combination as described elsewhere in this prospectus). Consequently, holders of a majority of our outstanding ordinary shares must approve our dissolution in order to receive the funds held in our trust account and, other than in connection with a redemption or a business combination, the funds will not be available for any other corporate purpose. As promptly as practicable upon the later to occur of (i) the approval by our shareholders of our plan of distribution or (ii) the effective date of such approved plan of distribution, we will liquidate our trust account to our public shareholders. Concurrently, we shall pay, or reserve for payment, from
interest released to us from the trust account if available, our liabilities and obligations. As more fully described below, each of John Wang, Robert Eu, and Stephen N. Cannon will, by agreement, be personally liable (each in an amount proportional to the number of shares owned as compared to all of them as a group) to ensure that the proceeds in the trust account are not reduced by such liabilities and obligations in the event that we dissolve prior to the consummation of a business combination.
Our founders have agreed to waive their rights to participate in any liquidation of our trust account or other assets with respect to their founders’ ordinary shares and to vote their founders’ ordinary shares in favor of any dissolution and plan of distribution which we submit to a vote of shareholders. There will be no distribution from the trust account with respect to our warrants, which will expire worthless if we are liquidated.
We estimate that our total costs and expenses for implementing and completing a shareholder-approved dissolution and plan of distribution will be between $75,000 and $125,000. This amount includes all costs and expenses relating to filing our dissolution in the Cayman Islands, the winding up of our company, printing and mailing a proxy statement, holding a shareholders’ meeting relating to the approval by our shareholders of our
73
TABLE OF CONTENTS
dissolution and plan of distribution, legal fees and other filing fees. We believe that there should be sufficient funds available from the interest earned on the trust account and released to us as working capital, to fund the $75,000 to $125,000 in costs and expenses.
If we were unable to conclude an initial business combination and expended all of the net proceeds of this offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, net of income and franchise taxes payable on such interest and net interest income on the trust account balance previously released to us to fund working capital requirements, the initial per-share liquidation price would be $7.76, or $0.24 less than the per share offering price of $8.00 (assuming that the entire purchase price of the units was allocated to the ordinary shares). The per share
liquidation price includes approximately $960,000 in deferred underwriting discounts and commissions (or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full) that would also be distributable to our public shareholders.
The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would be prior to the claims of our public shareholders. Although we will seek to have all vendors, prospective target businesses or other entities we engage execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account, including but not limited to,
fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with a claim against our assets, including the funds held in the trust account. If any third party refused to execute an agreement waiving such claims to the monies held in the trust account, we would perform an analysis of the alternatives available to us if we chose not to engage such third party and evaluate if such engagement would be in the best interest of our shareholders if such third party refused to waive such claims. Examples of possible instances where we may engage a third party that refused to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a provider of required
services willing to provide the waiver. In any event, our management would perform an analysis of the alternatives available to it and would only enter into an agreement with a third party that did not execute a waiver if management believed that such third party’s engagement would be significantly more beneficial to us than any alternative. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.
Each of John Wang, Robert Eu and Stephen N. Cannon have agreed that, if we dissolve prior to the consummation of a business combination, they will agree to indemnify us (each in an amount proportional to the number of shares owned as compared to all of them as a group) for all claims of vendors, potential target businesses or other persons, to the extent we fail to obtain valid and enforceable waivers from such parties to ensure that the proceeds in the trust account are not reduced. However, we cannot assure you that any of them will be able to satisfy those obligations. Under these circumstances, our board of directors would have a fiduciary
obligation to our shareholders to bring a claim against John Wang, Robert Eu and Stephen N. Cannon to enforce their liability obligation. None of John Wang, Robert Eu and Stephen N. Cannon will be personally liable to pay any of our debts and obligations except as provided above. Accordingly, we cannot assure you that due to claims of creditors the actual per-share liquidation price will not be less than $7.76, plus interest, net of income and franchise taxes payable on such interest and net of interest income on the trust account balance previously released to us to fund working capital requirements. Additionally, if we do not complete an initial business combination and the trustee must distribute the balance of the trust account, the underwriters have agreed that (i) on our liquidation they will forfeit any rights or claims to their deferred underwriting discounts and commissions, including any accrued interest thereon, then in the trust account and (ii) the deferred underwriting
discounts and commission will be distributed on a pro ratabasis among the public shareholders, together with any accrued interest thereon and net of income and franchise taxes payable on such interest.
74
TABLE OF CONTENTS
If we enter into either a letter of intent, an agreement in principle or a definitive agreement to complete a business combination prior to the expiration of 18 months after the consummation of this offering, but are unable to complete the business combination within the 18-month period, then we will have an additional six months in which to complete the business combination contemplated by the letter of intent, agreement in principle or definitive agreement. If we are unable to do so by the expiration of the 24-month period from the consummation of this offering, prior to the expiration of such 24-month period, we will hold a special shareholders
meeting for the purpose of seeking shareholder approval to extend the date before which we must complete a business combination, to avoid being required to liquidate, by an additional 12 month period beyond the 24-months, for a total of 36 months. If our public shareholder holding 30.0% or more of our outstanding public shares exercise their redemption rights for a pro rata share of funds held in the trust account at such special meeting and we cannot consummate the proposed business combination within the 24-month period, we will be dissolved and liquidated as described in the first paragraph of this subsection. Upon notice from us, the trustee of the trust account will commence liquidating the investments constituting the trust account and will turn over the proceeds to our transfer agent for distribution to our public shareholders. Our instruction to the trustee will be given promptly after the later to occur of (i) the approval by our shareholders of our dissolution and plan of
distribution or (ii) the effective date of such approved dissolution and plan of distribution.
Our public shareholders shall be entitled to receive funds from the trust account only in the event of our dissolution or if the shareholders seek to have us redeem their respective shares for cash in connection with (i) a vote against the extended period which is approved by our shareholders or (ii) a vote against our initial business combination which is actually completed by us. In no other circumstances shall a shareholder have any right or interest of any kind to or in the trust account. Prior to our completing an initial business combination or liquidating, we are permitted to have released from the trust account all of interest income earned
on the trust account to pay taxes and to fund our working capital requirements.
Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the funds held in our trust account will be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to claims of third parties with priority over the claims of our public shareholders. To the extent bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public shareholders the liquidation amounts due them.
We expect that all costs associated with the implementation and completion of our dissolution and plan of distribution (currently estimated to be between $75,000 and $125,000 if not done in connection with a shareholder vote with respect to a potential business combination) as well as funds for payments to creditors, if any, will be funded by the interest earned on the trust account released to us, although we cannot give you assurances that there will be sufficient funds for such purposes.
Under the Companies Law, in the case of a full voluntary liquidation procedure, a liquidator would give at least 21 days’ notice to creditors of his intention to make a distribution by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in the Cayman Islands Official Gazette, although in practice this notice requirement need not necessarily delay the distribution of assets as the liquidator may be satisfied that no creditors would be adversely affected as a consequence of a distribution before this time period has expired. We anticipate the trust account should be liquidated shortly following
expiration of the 21 day period. As soon as the affairs of the company are fully wound-up, the liquidator must lay his final report and accounts before a final general meeting which must be called by a public notice at least one month before it takes place. After the final meeting, the liquidator must file a return to the Cayman Islands Registrar of Companies confirming the date on which the meeting was held and three months after the date of such filing the company is dissolved.
Additionally, in any liquidation proceedings of the company under Cayman Islands’ law, the funds held in our trust account may be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the trust account we cannot assure you we will be able to return to our public shareholders the liquidation amounts payable to them. Furthermore, a liquidator of the company might seek to hold a shareholder liable to contribute to our estate to the extent of distributions received by them pursuant to the dissolution of the trust account beyond the date of
dissolution
75
TABLE OF CONTENTS
of the trust account. Additionally, we cannot assure you that third parties will not seek to recover from our shareholders amounts owed to them by us. Furthermore, our board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims for having paid public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Articles of Association
Our articles of association sets forth certain requirements and restrictions relating to this offering that apply to us until the consummation of a business combination. Specifically, our articles of association provides, among other things, that:
|
|
•
|
if we have entered into a letter of intent or definitive agreement with respect to a business combination within 18 months of the consummation of this offering, and we anticipate that we will not be able to consummate a business combination within 24 months, we can seek shareholder approval to extend the period of time to consummate a business combination by an additional 12 months. In such case, we will present such proposal to our shareholders together with the ability to exercise their redemption rights at that time. In order to approve the extended period (i) we must receive shareholder approval of a majority of our ordinary shares voted by our public shareholders and (ii) shareholders owning less than 30.0% of the ordinary shares purchased by the public shareholders in this offering may exercise their redemption rights;
|
|
|
•
|
if the extended period is approved, public shareholders who voted against such proposal and exercised their redemption rights will receive their pro rata share of the trust account;
|
|
|
•
|
prior to the consummation of our initial business combination, we shall submit such business combination to our shareholders for approval;
|
|
|
•
|
we may consummate our initial business combination if: (i) approved by a majority of the ordinary shares voted by our public shareholders, and (ii) shareholders owning less than 30.0% of the ordinary shares purchased by the public shareholders in this offering exercise their redemption rights (on a cumulative basis, including shares redeemed in connection with our seeking shareholder approval for the extended period, if applicable);
|
|
|
•
|
if our initial business combination is approved and consummated, public shareholders who voted against the business combination and exercised their redemption rights will receive their pro rata share of the trust account;
|
|
|
•
|
if a business combination is not consummated or a letter of intent, an agreement in principle or a definitive agreement is not signed within the time periods specified in this prospectus, then we will be dissolved and distribute to all of our public shareholders their pro rata share of the trust account;
|
|
|
•
|
our management will take all actions necessary to liquidate our trust account to our public shareholders as part of our plan of dissolution if a business combination is not consummated or a letter of intent, an agreement in principle or a definitive agreement is not signed within the time periods specified in this prospectus (consistent with such obligations, our directors have agreed to vote in favor of such dissolution and liquidation); and
|
|
|
•
|
our shareholders’ rights to receive a portion of the trust fund are limited such that they may only receive a portion of the trust fund upon liquidation of our trust account to our public shareholders as part of our plan of distribution or upon the exercise of their redemption rights;
|
|
|
•
|
we may not consummate any other merger, capital stock exchange, stock purchase, asset acquisition or similar transaction or control through contractual arrangements other than a business combination that meets the conditions specified in this prospectus, including the requirement that our initial business combination be with one or more operating businesses whose fair market value, either individually or collectively, is equal to at least 80% of the amount in the trust account (excluding deferred underwriting discounts and commissions and taxes payable) at the time of such business combination.
|
76
TABLE OF CONTENTS
The above-referenced requirements and restrictions included in our articles of association are obligations to our shareholders and may only be amended prior to consummation of a business combination with the vote of our board of directors and the affirmative vote of at least 80% of the voting power of our outstanding ordinary shares (which restrictions on amendment Cayman Islands counsel has indicated is enforceable under Cayman Islands law). Our founders have agreed to vote their founders' ordinary shares in the same manner as a majority of the public shareholders at the special meeting called for such purpose. If any of these provisions are
amended, our shareholders:
|
|
•
|
may lose the right to redeem their ordinary shares if they vote against a business combination;
|
|
|
•
|
may lose the right to prevent a business combination if 30% of our shareholders vote against the extended period or the business combination;
|
|
|
•
|
might not receive the amount anticipated in connection with a redemption or liquidation;
|
|
|
•
|
might not receive amounts from trust in the time frames specified in this prospectus.
|
However, in light of the requirement that we obtain the approval of at least 80% of the voting power of our shareholders, we do not anticipate any changes to such requirements and restrictions prior to our consummation of a business combination, if any. In connection with the shareholder vote required to approve the extended period or a business combination, our founders have agreed to vote their founder's ordinary shares in the same manner as a majority of the public shareholders who vote at the special or annual meeting called for such purpose. In addition, each of our founders has agreed that if he acquires ordinary shares in or following this
offering, he will vote all such acquired shares in favor of the extended period and/or a business combination.
Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419
The following table compares the terms of this offering to the terms of an offering by a blank check company subject to the provisions of Rule 419. This comparison assumes that the gross proceeds, underwriting discounts and underwriting expenses of our offering would be identical to those of an offering undertaken by a company subject to Rule 419, and that the underwriters will not exercise their over-allotment option. None of the provisions of Rule 419 apply to our offering.
|
|
|
|
|
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
|
Escrow of offering proceeds
|
|
Approximately $31.0 million of the net offering and private placement proceeds, including $960,000 in deferred underwriting discounts and commissions, will be deposited into a trust account at HSBC maintained by Continental Stock Transfer & Trust Company, as trustee.
|
|
$26.8 million of the offering proceeds would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the account.
|
77
78
79
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
|
Election to remain an investor
|
|
Shareholders will have the opportunity to vote on the initial business combination. Each shareholder will be sent a proxy statement containing information required by the SEC. A shareholder following the procedures described in this prospectus is given the right to cause us to redeem his, her or its shares for a pro rata share of the trust account, before payment of deferred underwriting discounts and commissions and including accrued interest, net of income and franchise taxes on such interest and net of one-half the interest income earned on the trust account balance and released to us to fund our working capital requirements. However, a shareholder who does not follow these procedures or a shareholder who does not take any action would not be entitled to the return of any funds from the trust account. If a majority of the ordinary shares voted by the public shareholders are not voted in favor of a proposed initial business
combination but 18 months has not yet passed since the consummation of this offering, we may seek other target businesses with which to effect our initial business combination that meet the criteria set forth in this prospectus. If at the end of the 18, 24 or 36 month period, as applicable, we have not obtained shareholder approval for an alternate initial business combination, we will dissolve and liquidate and promptly distribute the proceeds of the trust account, including accrued interest, net of income and franchise taxes on such interest and net of interest income previously released to us to fund our working capital requirements.
|
|
A prospectus containing information required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of a post-effective amendment to the company’s registration statement, to decide if he, she or it elects to remain a shareholder of the company or require the return of his, her or its investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account are automatically returned to the shareholder. Unless a sufficient number of investors elect to remain investors, all funds on deposit in the escrow account must be returned to all of the investors and none of the securities are issued.
|
80
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
|
Business combination deadline
|
|
Our initial business combination must occur within 18 months after the consummation of this offering or within 24 months after the consummation of this offering if a letter of intent or definitive agreement relating to a prospective business combination is executed before the 18-month period ends or by the expiration of the extended period; if our initial business combination does not occur within these time frames and we are dissolved as described herein, funds held in the trust account, including deferred underwriting discounts and commissions, will be returned to investors as promptly as practicable, including accrued interest, net of income and franchise taxes on such interest and net of interest income previously released to us to fund our working capital requirements.
|
|
If an acquisition has not been consummated within 18 months after the effective date of the company’s registration statement, funds held in the trust or escrow account are returned to investors.
|
|
Release of funds
|
|
Except with respect to one-half of the interest income released to us (up to a maximum of $1,350,000) to fund our working capital expenses and to pay taxes, if any, as described elsewhere in this prospectus, and interest income the proceeds held in the trust account are not released until the earlier of the consummation of our initial business combination or the failure to complete our initial business combination within the allotted time.
|
|
The proceeds held in the escrow account are not released until the earlier of the consummation of a business combination or the failure to effect a business combination within the allotted time.
|
81
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
|
Interest earned on funds in the trust account
|
|
One-half of the interest earned on the trust account (up to $1,350,000) may be released to us to fund our working capital requirements from time to time. Shareholders who redeem their ordinary shares for cash in connection with the extended period or a business combination will not receive any portion of that amount that has been previously released to us; upon our liquidation, shareholders shall be entitled to a portion of the interest earned on funds held in trust, if any, not previously released to us to fund our working capital requirements, net of income and franchise taxes payable on such funds held in trust.
|
|
The interest earned on proceeds held in the trust account (net of taxes payable) would be held for the sole benefit of investors, and we would be unable to access such interest for working capital purposes.
|
Competition
In identifying, evaluating and selecting a target business for a business combination, we may encounter intense competition from other entities having a business objective similar to ours including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. While we believe there are numerous potential target businesses with
which we could combine, our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore:
|
|
•
|
our obligation to seek shareholder approval of our initial business combination or obtain necessary financial information may delay the consummation of a transaction;
|
|
|
•
|
our obligation to redeem for cash ordinary shares held by our public shareholders who vote against the business combination and exercise their redemption rights may reduce the resources available to us for a business combination;
|
|
|
•
|
our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses; and
|
|
|
•
|
the requirement to acquire an operating business that has a fair market value equal to at least 80% of the balance of the trust account at the time of the acquisition (excluding deferred underwriting discounts and commissions of $960,000 or approximately $1,104,000 if the underwriters’ over-allotment option is exercised in full and taxes payable) could require us to acquire the assets of several operating businesses at the same time, all of which sales would be contingent on the closings of the other sales, which could make it more difficult to consummate the business combination.
|
Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination.
Facilities
We currently maintain our executive offices at 13/F Tower 2, New World Tower, 18 Queens Road Central, Hong Kong. The cost for this space will be included in the $7,500 per-month fee described above that
82
TABLE OF CONTENTS
Hambrecht Eu Capital Management LLC will charge us for office space, administrative services and secretarial support from the consummation of this offering until the earlier of consummation of a business combination or our liquidation. Hambrecht Eu Capital Management LLC also intends to establish an office in Shanghai to provide us additional facilities and support in China. We believe, based on rents and fees for similar services in Hong Kong, that the fees that will be charged by Hambrecht Eu Capital Management LLC is at least as favorable as we could have obtained from unaffiliated persons.
Employees
We currently have three officers. These individuals are not obligated to devote any specific number of hours to our business and intend to devote only as much time as they deem necessary to our business. We intend to hire employees and/or consultants, possibly including certain full time employees and/or consultants, in order to assist us in the search, due diligence for and consummation of a business combination.
Periodic Reporting and Financial Information
We have registered our securities under the Exchange Act and after this offering will have public reporting obligations, including the filing of annual and quarterly reports with the SEC. In accordance with the requirements of the Exchange Act, our annual report will contain financial statements audited and reported on by our independent registered public accounting firm and our quarterly reports will contain financial statements reviewed by our independent registered public accounting firm.
We will not acquire a target business if we cannot obtain audited financial statements based on United States generally accepted accounting principles for such target business. We will provide these financial statements in the proxy solicitation materials sent to shareholders for the purpose of seeking shareholder approval of our initial business combination. Our management believes that the need for target businesses to have, or be able to obtain, audited financial statements may limit the pool of potential target businesses available for acquisition.
We may be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2007. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Legal Proceedings
There is no litigation currently pending or threatened against us or any of our directors in their capacity as such.
John Wang, our Chief Executive Officer and President, has been named a defendant in two lawsuits which name as defendants two other named individuals, SBI-USA, LLC, a U.S. registered broker-dealer, and several of SBI-USA's subsidiaries. The lawsuits allege several claims, including violation of federal civil RICO statutes, securities fraud, breach of escrow agreement and breach of fiduciary duty. The plaintiffs generally allege that SBI-USA, through one of the other named defendants, breached the terms of an escrow agreement and distributed shares of common stock held for the benefit of a third party to the detriment of the plaintiffs. The complaints
do not specify the damages sought but one suit claims damages in excess of $1,600,000 and the other includes claims for damages in excess of $400,000. The first lawsuit was filed on June 8, 2007 and the second lawsuit was filed on December 7, 2007. Mr. Wang does not know if any additional lawsuits will be filed. Mr. Wang and the other defendants have denied any wrongdoing in connection with the allegations in the complaints. Mr. Wang has not been served with the complaints in these matters.
83
TABLE OF CONTENTS
MANAGEMENT
Directors and Executive Officer
Our current directors and executive officers are as follows:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
John Wang
|
|
37
|
|
Chief Executive Officer, President and Director
|
|
Robert J. Eu
|
|
44
|
|
Chairman of the Board, Secretary and Director
|
|
Stephen N. Cannon
|
|
40
|
|
Chief Financial Officer, Director
|
|
Lee S. Ting
|
|
64
|
|
Director
|
|
Feng Zhang
|
|
31
|
|
Consultant
|
John Wang
has been our Chief Executive Officer, President and a director since our inception. Mr. Wang has over twelve years of investment banking and consulting experience. Since November 2004, Mr. Wang has been the Managing Director of Marbella Capital Partners Ltd., a financial advisory firm based in Shanghai which he founded. From January 2000 to November 2004, he helped develop and establish the U.S. operations of SBI USA as Executive Vice President of SBI E2-Capital (HK) Limited and was a Managing Director and Chief Operating Officer of SBI E2-Capital (USA) Ltd. Prior to SBI, from 1997 to 1999, he managed Accenture Consulting’s
Greater China communications, media, and high tech strategy practice, where he acted as consultant to China Mobile’s IPO in 1997, among other high profile projects. From 1994 to 1997 he was also the lead telecom analyst covering Greater China and Southeast Asia for Pyramid Research, a Cambridge Massachusetts based emerging market telecom research firm that is part of the Economist Intelligence Unit. Last year, he advised on four late-stage deals that closed, of which one has already gone public in Hong Kong and another, Yingli Green Energy (NYSE: YGE), completed its IPO and listing on the New York Stock Exchange on June 8, 2007. Mr. Wang currently sits on the Board of Hong Kong Stock Exchange listed Wuyi International Pharmaceutical Company Limited (HKSE: 1889). Mr. Wang holds a Bachelor of Arts degree in international relations from Tufts University and is a graduate of the Washington International Studies Program at St. Catherine’s College at Oxford University. He has an
M.A.L.D. in international law and business from The Fletcher School of Law and Diplomacy and is a graduate of the Private Equity course at Harvard Business School.
Robert J. Eu
has been our Chairman of the Board, Secretary and director since our inception. Since 1998, Mr. Eu has served as a Managing Director for W.R. Hambrecht + Co., LLC (“WR Hambrecht + Co”) a San Francisco-based investment bank. Mr. Eu founded WR Hambrecht + Co’s investment banking practice in Asia in 2003. Prior to WR Hambrecht + Co, Mr. Eu was a Managing Director of H&Q Asia Pacific from 1992 until 1998, an affiliate of Hambrecht & Quist, where he co-founded its Hong Kong office and China investment practice. In 1996, Mr. Eu led the buy-out and de-listing of Eu Yang Sang (Hong Kong) Limited from the Hong Kong
stock exchange and the company is now listed on the Singapore Stock Exchange. Mr. Eu has been a director of Eu Yang Sang since 1997. In 1992, prior to working at H&Q Asia Pacific, Mr. Eu was the Business Development Manager for Eu Yang Sang International Limited (SGX:EYSI), a manufacturer and retailer of Traditional Chinese medicine. Mr. Eu has been a director and the Chairman of AEX Enterprises Limited (“AEX Enterprises”) since 2003. AEX Enterprises’ sole operating subsidiary is Boom Securities (H.K.) Limited (“Boom Securities”). Boom Securities is a licensed broker / dealer regulated by the Securities and Futures Commission (SFC) of Hong Kong and headquartered in Hong Kong. Mr. Eu worked for Citibank from 1987 until 1992 in the Private Banking Group in Hong Kong. Mr. Eu is a graduate of Northwestern University with a B.A. in History.
Stephen N. Cannon
has been our Chief Financial Officer and one of our directors since our inception. Since 2005, Mr. Cannon has served as a Managing Director of Asia investment banking for WR Hambrecht + Co. From July 2003 to August 2005 he was an advisor to Ackrell & Co., an investment banking firm. Also from July 2003 to August 2005, Mr. Cannon was the owner of Thinking Films, LLC, a film production company. Mr. Cannon began his investment banking career in 1991 with Salomon Brothers and worked there until 1993, and prior to WR Hambrecht + Co, also worked at Smith Barney (1993-1994), Donaldson Lufkin & Jenrette (1994-2000), and
ABN-Amro Securities (2000-2002). Mr. Cannon’s career has spanned several industry and product groups, including M&A, public equity and debt, private equity and debt, high yield financings,
84
TABLE OF CONTENTS
leveraged buy-outs and restructurings. He is a graduate of the University of Notre Dame with a B.A. in mechanical engineering and a B.A. in economics.
Lee Ting
has been one of our directors since our inception. Mr. Ting has over 30 years of experience in technology. Since 2000, Mr. Ting has served as a Managing Director for WR Hambrecht + Co. Prior to WR Hambrecht + Co, Mr. Ting worked at Hewlett Packard from 1965 to 2000, most recently as Corporate Vice President of Hewlett Packard’s Global Operations Division. Mr. Ting currently serves as a director for Lenovo, a leader in the personal computing market publicly held in Hong Kong. Mr. Ting also serves as a director of Microelectronics Technology Inc., a Taiwan-listed company focused on microwave and satellite communication
technologies. In addition to his positions at these two publicly-held companies, Mr. Ting also serves as director for two privately-held companies including YeePay, a leading e-payment service provider in China, and Beijing EPIN Media Co., Ltd., a China-based media company focused on the railway industry. Mr. Ting obtained his B.S. in Electrical Engineering at Oregon State University and is a graduate of the Stanford Executive Program.
Feng Zhang
has been a consultant to Hambrecht Asia Acquisition Corp. since our inception. Mr. Zhang has over six years of investment, financial consulting and mergers and acquisitions experience. He was an investment and business development manager with Xinhua Finance from 2004 to 2006. Prior to Xinhua Finance, from 2002 to 2004, Mr. Zhang was a student at Georgia Institute of Technology, obtaining his Master’s degree in Financial Economics. From 2001 to 2002, Mr. Zhang worked for a holding company of the Search Group as the financial controller. He was also a senior auditor for PricewaterhouseCoopers from 1997 to 2001. Since 2006, he
has been the Executive Vice President of Marbella Capital Partners Ltd., a financial advisory firm based in Shanghai. Mr. Zhang holds a Master of Science degree in Financial Economics from Georgia Institute of Technology and a Bachelor of Science degree from the management school of Shanghai Jiao Tong University.
Our directors and officers will play a key role in identifying, evaluating, and selecting target businesses, and structuring, negotiating and consummating our business combination. Except as described below and under Conflicts of Interest, beginning on page
87
, none of these individuals has been a principal of or affiliated with a public company or blank check company that executed a business plan similar to our business plan and none of these individuals is currently affiliated with such an entity. However, we believe that the skills and experience of these individuals, their collective access to acquisition opportunities and
ideas, their contacts, and their transaction expertise should enable them to successfully identify and effect a business combination although we cannot assure you that they will, in fact, be able to do so.
Prior Involvement of Principals in Blank Check Companies
W.R. Hambrecht + Co., LLC (“WR Hambrecht + Co”), an entity for which Messrs. Eu, Cannon and Ting are executives, has been involved in the following China-based Blank Check transactions:
|
|
|
|
|
|
|
|
|
Blank Check Company
|
|
WR Hambrecht + Co Role
|
|
Transaction Facts
|
|
Role of our Executives
|
China Unistone Acquisition Corporation
(NasdaqGM:YTEC)
|
|
Advisor — Fairness
Opinion
|
|
IPO:
$20.7 million at $6.00/unit
Target:
Yucheng Technologies (Dec. 2005)
|
|
Messrs. Eu and Cannon were involved in advisory services and in preparing the fairness opinion.
|
Great Wall
Acquisition
Corporation
(OTC:CEUC)
|
|
Financial Advisor
|
|
IPO:
$27.1 million at $6.00/unit
Target:
ChinaCast Education (Sep. 2005)
|
|
Mr. Eu assisted in identifying the target for the company and was involved as an intermediary between the company and the target. Messrs. Eu and Cannon provided advisory services throuout the acquisition process.
|
85
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
Blank Check Company
|
|
WR Hambrecht + Co Role
|
|
Transaction Facts
|
|
Role of our Executives
|
Shanghai Century Acquisition
Corporation
(AMEX:SHA)
|
|
Underwriter — Lead Manager
|
|
IPO:
$115.0 million at $8.00/unit
Target:
Sichuan Kelun Pharmaceutical Co., Ltd. (pending)
|
|
Messrs. Eu and Cannon were involved in the underwriting process and continue to provide services to the company since WRH+Co is entitled to receive a portion of the deferred underwriting compensation
|
Jaguar Acquisition Corp.
(OTC:JGAC)
|
|
Financial Advisor to target
|
|
IPO:
$24 million at $6.00/unit
Target:
China CableCom Ltd. (pending)
|
|
Mr. Cannon is involved in providing advisory services.
|
|
China Pacific Acquisition Corp.
|
|
Underwriter
|
|
Anticipated IPO of $60.0 million at $8.00/unit
|
|
Mr. Eu is involved in the underwriting process
|
|
Not Publicly Available IPO for Special Purpose Acquisition Company
|
|
Underwriter
|
|
Not yet announced
Expected Size: ___
|
|
Mr. Cannon is involved in the underwriting process for this blank check company which is not focussed on acquiring a business in the PRC.
|
|
Not Publicly Available IPO for Special Purpose Acquisition Company
|
|
Underwriter
|
|
Not yet announced
Expected Size: ___
|
|
Mr. Cannon is involved in the underwriting process for this blank check company which is not focussed on acquiring a business in the PRC.
|
The only blank check company that our officers or directors assisted in finding a target business was Great Wall Acquisition Corporation. Mr. Eu assisted Great Wall in locating a target business and served as an intermediary between Great Wall and the target business during the acquisition process. Messrs. Eu and Cannon also served as advisors to Great Wall during the acquisition of ChinaCast Education Corporation. Messrs. Eu and Cannon provided China Unistone Acquisition Corporation with advisory services in connection with the business combination with its target business and WR Hambrecht + Co delivered a fairness opinion (with which Messrs. Eu and
Cannon assisted) with respect to the transaction. Mr. Cannon is currently providing advisory services to China CableComm Ltd., which is being acquired by Jaguar Acquisition Corp. (a blank check company). Other than the foregoing, the members of our management team have only been involved in the underwriting process for the initial public offerings of certain blank check companies, as disclosed in the table above.
Other than as set forth above, our officers and directors have not previously been involved in working with blank check companies. Mr. Ting is affiliated with blank check companies only through his position with WR Hambrecht + Co. John Wang has not previously worked with blank check companies.
Executive Officers and Director Compensation
None of our directors have received any cash compensation for services rendered to us. John Wang, Robert J. Eu and Stephen N. Cannon, our directors and executive officers, purchased an aggregate of 1,150,000 ordinary shares for an aggregate purchase price of $25,000. As the price paid was fair market value at the time, we do not consider the value of the shares at the offering price to be compensation. Rather, we believe that because they own such shares, no compensation (other than reimbursement of out of pocket expenses) is necessary and such persons agreed to serve in such role without compensation.
We have agreed to pay Hambrecht Eu Capital Management LLC, an affiliate of Robert Eu, one of our founders and our Chairman and Secretary, and Elizabeth Hambrecht, Mr. Eu’s wife, a total of $7,500 per month for office space, administrative services and secretarial support beginning on November 15, 2007 until
86
TABLE OF CONTENTS
the earlier of our consummation of a business combination or our liquidation. This arrangement is being agreed to by Hambrecht Eu Capital Management LLC for our benefit and is not intended to provide Hambrecht Eu Capital Management LLC compensation. We believe that such fees are at least as favorable as we could have obtained from an unaffiliated third party.
Other than this $7,500 per-month fee, no compensation of any kind, including finder’s and consulting fees, will be paid to our directors or officers, or any of their respective affiliates, for services rendered prior to or in connection with a business combination. However, these individuals and the founders will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There are no limitations on the amount of expenses for which they can seek reimbursement, provided such expenses were incurred
for our benefit. After a business combination, our directors and offiocers who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials furnished to our shareholders. It is unlikely the amount of such compensation will be known at the time of a shareholder meeting held to consider a business combination, as it will be up to the directors of the post-combination business to determine executive and director compensation.
Conflicts of Interest
General
As a result of their affiliations with certain companies, each of Messrs. Eu, Wang, Cannon and Ting have pre-existing contractual and fiduciary obligations that may cause them to have conflicts of interest in determining to which entity they present a specific business opportunity.
Potential investors should be aware of the following potential conflicts of interest:
|
|
•
|
As indicated in the table under “Prior Involvement of Principals in Blank Check Companies”, except for John Wang, all of our officers and directors are currently performing services, or work for companies that are currently performing services, for other blank check companies engaged in business activities similar to those intended to be conducted by our company, although none of them, nor any of their affiliates, are currently engaged by other blank check companies to assist them in connection with a business combination, though they may be engaged to perform such services in the future (though they may not become principals in a blank check company that will seek to acquire a target business in the PRC until we have announced that we located a target business). However, regardless of their performing such services for other blank check companies in the future, since they do not have a pre-existing obligation, they would have a
fiduciary obligation to present potential target businesses to us prior to presenting them to such other companies.
|
|
|
•
|
In the course of their other business activities, including their current affiliations with other blank check companies, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. They may have conflicts of interest in determining to which entity a particular business opportunity should be presented. For a complete description of our management’s other affiliations, see the previous section entitled “Directors and Executive Officers.”
|
|
|
•
|
None of our officers or directors are required to commit any specified amount of time to our affairs and are free to become involved in other blank check companies (though they may not become principals in a blank check company (in other words, they will not organize or promote as principals, though they will be able to act as underwriters or advisors to blank check companies, subject to their pre-existing fiduciary obligation to us) which will seek a target business with its primary operations in the PRC until after we have announced that we located a target business). Accordingly, they will have conflicts of interest in allocating management time among various business activities.
|
|
|
•
|
Our directors may have a conflict of interest in determining whether a particular target business is appropriate for us and our shareholders since each of our directors will be subject to a lock-up
|
87
TABLE OF CONTENTS
|
|
|
agreement, which only terminates following our consummation of a business combination. The personal and financial interests of our directors may influence his/their motivation in identifying and selecting a target business, completing a business combination timely and securing the release of their securities.
|
|
|
•
|
In the event we elect to make a substantial down payment, or otherwise incur significant expenses, in connection with a potential business combination, our expenses could exceed the remaining proceeds not held in trust. Our directors may have a conflict of interest with respect to evaluating a particular business combination if we incur such excess expenses. Specifically, and our directors may tend to favor potential business combinations with target businesses that offer to reimburse any expenses in excess of our available proceeds not held in the trust account as well as the interest income earned on the trust account balance that may be released to us from time to time.
|
|
|
•
|
Our directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such directors were included by a target business as a condition to any agreement with respect to a business combination. We have been advised by our directors that they will not take retaining their positions into consideration in determining which acquisition to pursue.
|
In general, under Cayman Island law, our directors have a duty of loyalty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association. In certain limited circumstances, a shareholder has the right to seek damages if a duty owed by our directors is breached.
Accordingly, as a result of multiple business affiliations, our directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities, including other blank-check companies. In addition, conflicts of interest may arise when our board of directors evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
Each of our directors has, or may come to have, to a certain degree, other fiduciary obligations. A majority of our directors have fiduciary obligations to other companies on whose board of directors they presently sit, or may have obligations to companies whose board of directors they may join in the future. To the extent that they identify business opportunities that may be suitable for us or other companies on whose board of directors they may sit, our directors will honor those fiduciary obligations. Accordingly, they may not present opportunities to us that come to their attention in the performance of their duties as directors of such other
entities unless the other companies have declined to accept such opportunities or clearly lack the resources to take advantage of such opportunities.
Below is a table summarizing the companies to which our officers and directors owe fiduciary obligations that would conflict with their fiduciary obligations to us, all of which would have to (i) be presented appropriate potential target businesses by our officers and directors, and (ii) reject the opportunity to acquire such potential target business, prior to their presentation of such target business to us:
|
|
|
|
|
|
|
Individual
|
|
Entity
|
|
Affiliation
|
|
John Wang
|
|
Marbella Capital Partners Ltd.
|
|
Managing Director
|
|
|
|
Wuyi International Pharmaceutical Company Limited
|
|
Director
|
|
Robert Eu
|
|
W.R. Hambrecht + Co., LLC
|
|
Managing Director
|
|
|
|
AEX Enterprises Limited
|
|
Chairman and Director
|
|
|
|
Eu Yang Sang International Limited
|
|
Non-Executive Director
|
|
Stephen N. Cannon
|
|
W.R. Hambrecht + Co., LLC
|
|
Managing Director of
Asia Investment Banking
|
88
TABLE OF CONTENTS
|
|
|
|
|
|
|
Individual
|
|
Entity
|
|
Affiliation
|
|
Lee Ting
|
|
W.R. Hambrecht + Co., LLC
|
|
Managing Director
|
|
|
|
Lenovo
|
|
Director
|
|
|
|
Microelectronics Technology Inc.
|
|
Director
|
|
|
|
YeePay
|
|
Director
|
|
|
|
Beijing EPIN Media Co., Ltd.
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These individuals have no other fiduciary obligations that would take priority with respect to the fiduciary obligations they owe to us.
In addition, Messrs. Eu, Cannon and Ting are affiliated with W.R. Hambrecht + Co., LLC (“WR Hambrecht + Co”), an investment banking firm committed to using technology and auction processes to help clients use the market to determine pricing and allocation of its public equity offerings. WR Hambrecht + Co provides underwriting and advisory services for Asian, consumer, healthcare, technology and other emerging growth companies, as well as equity research, sales and trading, full-service and online brokerage serving over 10,000 retail clients and private equity offerings for institutions and individuals. Although WR Hambrecht + Co does assist
blank check companies with their initial public offerings and in connection with business combinations, it is not currently, and does not have any current plans to be, engaged by a blank check company to locate a target business for that company. WR Hambrecht + Co currently intends to provide financial advisory services to a blank check company with respect to a target business it already located.
Each of Messrs. Eu, Cannon and Ting may become aware of business opportunities that may be attractive to both WR Hambrecht + Co to pursue for its investment banking business and us to pursue as a potential business combination. In that event, they will pursue the transaction on behalf of WR Hambrecht + Co, and not on our behalf. In the event that WR Hambrecht + Co determines not to pursue a particular business opportunity or such potential target business determines not to work with WR Hambrecht + Co, Messrs. Eu, Cannon and Ting may then present such potential target business to us.
John Wang, our Chief Executive Officer, President and director and Feng Zhang, our consultant, serve as executives of Marbella Capital Partners Ltd., a financial services firm engaged in business advisory, financial advisory and capital markets services. Marbella Capital Partners has assisted approximately six China-based companies in raising over $200 million since 2004. Marbella Capital Partners is not currently, and does not have any current plans to be, engaged by any blank check company to locate a target business for that company.
Each of AEX Enterprises Limited and Marbella Capital Partners, which represent all of the privately held companies owned and or controlled by our officers and directors, has entered into a Right of First Refusal and Corporate Opportunities Agreement which provides that, commencing on the date of this prospectus and extending until the earlier of the closing of our initial business combination, or our liquidation, we will have the first opportunity to consider any business opportunity operating with a target businesses having its primary operations in the PRC. Each of the members of our Board of Directors has a fiduciary obligation to our shareholders
to enforce our rights under each of the Right of First Refusal Agreements. As such, they have no basis upon which to waive any of our rights under such agreements. In addition, any decision we make to release any entity to pursue any corporate opportunity would require the vote of a majority of our disinterested directors. As provided in such agreements none of such agreements can be amended to accelerate its termination or waived without the approval of holders of a majority of our outstanding Ordinary Shares.
89
TABLE OF CONTENTS
Below is a table showing the relationships among us and our officers, directors and consultants and certain related entities:
|
|
|
|
|
|
|
Name of Person/Entity
|
|
Relationship With Other Persons/Entities
|
|
Affiliation With Us
|
|
John Wang
|
|
Owns Marbella Capital Partners Ltd.
|
|
Chief Executive Officer, President and Director
|
|
Marbella Capital Partners Ltd.
|
|
Owned by John Wang
|
|
None
|
|
Robert Eu
|
|
Managing Director of W.R. Hambrecht + Co., LLC and chairman and Director of AEX Enterprises Limited. Controls Hambrecht Eu Capital Management
|
|
Chairman and Secretary
|
|
W.R. Hambrecht + Co., LLC
|
|
Messrs. Eu, Cannon and Ting are employees. Owned by William Hambrecht, who also controls 38% of the voting securities of AEX Enterprises Limited
|
|
Purchaser of our private placement warrants
|
|
AEX Enterprises Limited
|
|
Controlled by Elizabeth Eu, wife of Robert Eu, and William Hambrecht, father in law of Robert Eu.
|
|
Purchaser of our private placement warrants
|
Hambrecht Eu Capital
Management
|
|
Controlled by Robert Eu and Elizabeth Hambrecht, his wife.
|
|
Will provide us with administrative services.
|
|
Stephen N. Cannon
|
|
Managing Director of Asia Investment Banking for W.R. Hambrecht + Co., LLC
|
|
Chief Financial Officer and Director
|
|
Lee S. Ting
|
|
Managing Director of W.R. Hambrecht + Co., LLC
|
|
Director
|
Our officers and directors may also choose to become involved as principals in other blank check companies as long as such other blank check company will not seek to acquire a target business with its primary operations in the PRC until after we have announced a business combination.
Additionally, our directors may become aware of business opportunities that may be appropriate for presentation to us as well as the other entities with which they are or may be affiliated. As set forth above, we do not expect Lee Ting, who is not one of our officers, to present investment and business opportunities to us.
Other Conflict of Interest Limitations
We will not acquire an entity that is either a portfolio company of, or has otherwise received a financial investment from, our founders or their affiliates. Neither we, nor our directors have given, or will give, any consideration to entering into a business combination with companies affiliated with our founders or our directors.
In addition, we will not enter into a business combination with any underwriters or selling group members or any of their affiliates, unless we obtain an opinion from an unaffiliated, independent investment banking firm which is a member of FINRA that a business combination with such target business is fair to our shareholders from a financial point of view. Any such opinion will be included in our proxy solicitation materials, furnished to shareholders in connection with their vote on such a business combination.
90
TABLE OF CONTENTS
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of the date of this prospectus, and as adjusted to reflect the sale of our ordinary shares included in the units offered by this prospectus, and assuming no purchase of units in this offering, by:
|
|
•
|
each person known by us to be the beneficial owner of more than 5% of our outstanding ordinary shares;
|
|
|
•
|
each of our directors; and
|
|
|
•
|
all our directors as a group.
|
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them. The following table does not include the private placement warrants as these warrants are not exercisable within 60 days of the date of this prospectus.
|
|
|
|
|
|
|
|
|
|
|
Number of Ordinary
Shares
Beneficially Owned
|
|
Approximate Percentage
of Outstanding
Ordinary Shares
|
|
Name and Address of Beneficial Owner
(1)
|
|
Before
Offering
|
|
After
Offering
|
|
John Wang
|
|
|
333,333
|
|
|
|
33.33
|
%
|
|
|
6.66
|
%
|
|
Robert J. Eu
|
|
|
333,334
|
|
|
|
33.33
|
%
|
|
|
6.66
|
%
|
|
Stephen N. Cannon
(2)
|
|
|
333,333
|
|
|
|
33.33
|
%
|
|
|
6.66
|
%
|
|
Lee S. Ting
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
All directors and executive officer as a group (4 individuals)
|
|
|
1,000,000
|
(3)
|
|
|
100
|
%
|
|
|
20.00
|
%
|
|
|
(1)
|
The address for each of our beneficial owners is 13/F Tower 2, New World Tower, 18 Queens Road Central, Hong Kong.
|
|
|
(2)
|
The ordinary shares beneficially owned by Stephen N. Cannon are held by the Cannon Family Irrevocable Trust, of which Mr. Cannon is the sole trustee.
|
|
|
(3)
|
Does not include the 150,000 shares sold to our founders that are subject to redemption by us to the extent the underwriters over-allotment is not exercised in full.
|
Each of our officers and directors has agreed that prior to a business combination, in the event that the applicable officer or director resigns from his or her position with us or is asked by our Board of Directors to resign for cause (by at least a 2/3 vote of the Board of Directors) such officer or director will transfer his respective founder's shares to each of our other officers and directors pro-rata in accordance with the relative stock ownership of the remaining officers and directors at the price that such director or officer paid for such founder’s shares.
Our founders have waived their rights to participate in any liquidating distribution with respect to their founders’ ordinary shares and have agreed to vote in favor of any dissolution and plan of distribution which we will present to our shareholders for vote. Prior to a business combination, any transferee of their founders’ ordinary shares would be required to likewise waive any right to participate in any liquidating distributions prior to such shares being transferred.
If the underwriters determine the size of the offering should be increased or decreased, a share dividend, share combination or a contribution back to capital, as applicable, would be effectuated in order to maintain our existing shareholders’ ownership at a percentage of the number of shares to be sold in this offering.
None of our directors have indicated to us that he or she intends to purchase units in this offering. Immediately after this offering, John Wang, Robert J. Eu and Stephen N. Cannon will beneficially own an aggregate of 20% of the then issued and outstanding ordinary shares. Because of this ownership block, they may be able
91
TABLE OF CONTENTS
to effectively influence the outcome of all matters requiring approval by our shareholders, including the election of directors and approval of significant corporate transactions other than approval of a business combination. In the event that holders of more than 20% of the ordinary shares sold in this offering elect to redeem their shares, our existing shareholders have agreed to forfeit that number of shares (up to a maximum of 124,736) that will result in the number of shares owned by them prior to this offering collectively being no more than 23.81% of our outstanding ordinary shares immediately prior to the consummation of such business
combination after giving effect to the redemption.
On the date of this prospectus, all of our existing shareholders, including the purchaser of warrants in the private placement, will place the ordinary shares and warrants they owned before this offering into an escrow account maintained by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions for transfers (as discussed below) and the possible forfeiture of shares for cancellation by us (as discussed above), these securities will not be transferable during the escrow period and will not be released from escrow until (i) with respect to the shares, one year after the consummation of a business
combination, and (ii) with respect to the warrants, upon consummation of a business combination. Any transfer of securities will be subject to the same restrictions imposed on the existing shareholders. The ordinary shares held in the escrow account will only be released prior to this date if following a business combination we engage in a subsequent transaction resulting in all shareholders having a right to exchange their shares for cash or other consideration. Prior to their release from escrow, the securities may only be transferred (i) by gift to an affiliate or a member of the holder’s immediate family or to a trust or other entity, the beneficiary of which is one of our officers or directors or a member of their respective immediate families, (ii) by virtue of the laws of descent and distribution upon death of any holder, or (iii) pursuant to a qualified domestic relations order; provided, however, that such transfers may be implemented only upon the respective
transferee’s written agreement to be bound by the terms and conditions of the escrow agreement.
In addition, in connection with the vote required for the extended period and for our initial business combination, our founding security holders and each of our founders have agreed to vote the ordinary shares acquired by them before this offering in accordance with the majority of the ordinary shares voted by the public shareholders. In each case, our founding security holders and each of our founders has also agreed to vote any shares acquired by them in or after this offering in favor of the extended period and our initial business combination. Therefore, if any of the founding security holders or the founders acquires shares in or after this
offering, it/he must vote such shares in favor of the extended period or proposed business combination, as the case may be, and has, as a result, waived the right to exercise redemption rights for those shares in the event that both such proposals are approved by a majority of our public shareholders.
CERTAIN TRANSACTIONS
On July 18, 2007, John Wang, Robert J. Eu and Stephen N. Cannon purchased an aggregate of 1,150,000 of our ordinary shares (including up to 150,000 ordinary shares that we will redeem from our founders to the extent that the underwriters do not exercise their over-allotment option) for an aggregate purchase price of $25,000. Mr. Cannon subsequently transferred all of the shares he purchased to the Cannon Family Irrevocable Trust, of which Mr. Cannon is the sole trustee.
On [ ], 2008, AEX Enterprises Limited, W.R. Hambrecht + Co., LLC and the Hambrecht 1980 Revocable Trust, companies controlled by Elizabeth R. Hambrecht, wife of Robert Eu, one of our founders and our Chairman and Secretary, and William R. Hambrecht, Mr. Eu’s father-in-law, Shea Ventures LLC, a company controlled by Edmund H. Shea Jr. and Marbella Capital Partners Ltd., a company controlled by John Wang, our Chief Executive Officer, agreed to invest an aggregate of $1,150,000 in us in the form of private placement warrants to purchase 1,150,000 ordinary shares at a price of
$1.00 per warrant. Elizabeth R. Hambrecht owns approximately 25% and William R. Hambrecht controls (through a trust of which he is the trustee) approximately 38% of the voting shares of AEX Enterprises Limited. William Hambrecht is a controlling person of the voting shares of W.R. Hambrecht + Co., LLC and is the trustee of the Hambrecht 1980 Revocable Trust.
Pursuant to a registration rights agreement between us and our founders, our founders and AEX Enterprises Limited, W.R. Hambrecht + Co., LLC, the Hambrecht 1980 Revocable Trust, Shea Ventures LLC and
92
TABLE OF CONTENTS
Marbella Capital Partners Ltd. will be entitled to certain registration rights. Specifically, (i) the private placement warrants and the underlying ordinary shares will be entitled to certain registration rights immediately after the consummation of a business combination; and (ii) the founders’ ordinary shares will be entitled to certain registration rights one year from the consummation of a business combination. We are only required to use our best efforts to cause a registration statement relating to the resale of such securities to be declared effective and, once effective, only to use our best efforts to maintain the effectiveness of the
registration statement. The holders of warrants do not have the rights or privileges of holders of our ordinary shares or any voting rights until such holders exercise their respective warrants and receive ordinary shares. Certain persons and entities that receive any of the above described securities from our founders will, under certain circumstances, be entitled to the registration rights described herein. We will bear the expenses incurred in connection with the filing of any such registration statements. In the event that we breach our obligations under the registration rights agreement, we could be obligated to purchase the securities owned by our founders for the then fair market value of the securities.
We agreed to pay Hambrecht Eu Capital Management LLC, an affiliate of Robert Eu, one of our founders and our Chairman and Secretary, and Elizabeth Hambrecht, Mr. Eu’s wife, a total of $7,500 per month for office space, administrative services and secretarial support for the period from November 15, 2007 until the earlier of our consummation of a business combination or our liquidation. This arrangement was agreed to by Hambrecht Eu Capital Management LLC for our benefit and is not intended to provide Mr. Eu compensation. We believe that such fees are at least as favorable as we could have obtained from an unaffiliated third party.
Robert Eu, our Chairman and Secretary, has provided us with a $290,000 revolving credit line to pay the expenses of this offering referenced in the line items above for the SEC registration fee, FINRA registration fee and accounting and legal fees and expenses. As of December 31, 2007, there was $281,661 outstanding under this revolving credit line. These advances bear interest at a rate of 4% per year, are unsecured and are due within 15 days following the consummation of this offering. The loan will be repaid out of the proceeds of this offering.
We will reimburse our officers and directors for any reasonable out-of-pocket business expenses incurred by them in connection with certain activities on our behalf such as identifying and investigating possible target businesses and business combinations. Subject to availability of proceeds not placed in the trust account and the interest income on the balance in the trust account to be released to us from time to time, there is no limit on the amount of out-of-pocket expenses that could be incurred. This formula was a result of a negotiation between us and the underwriters and was meant to help maximize the amount of money in the trust account that
would be returned to the investors if we do not consummate a business combination within the permitted time. Our board of directors will review and approve all expense reimbursements made to our directors with the interested director or directors abstaining from such review and approval. To the extent such out-of-pocket expenses exceed the available proceeds not deposited in the trust account, such out-of-pocket expenses would not be reimbursed by us unless we consummate a business combination.
Other than the $7,500 per month administrative fee and reimbursable out-of-pocket expenses payable to Hambrecht Eu Capital Management LLC, an affiliate of Robert Eu, one of our founders and our Chairman and Secretary, and Elizabeth Hambrecht, Mr. Eu’s wife, no fees of any kind, including finders and consulting fees, will be paid to any of our directors who owned our ordinary shares prior to this offering, or to any of their respective affiliates for services rendered to us prior to or with respect to the business combination.
After a business combination, any of our directors who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials furnished to our shareholders. It is unlikely that the amount of such compensation will be known at the time of a shareholder meeting held to consider a business combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in
a Current Report on Form 8-K, as required by the SEC.
All ongoing and future transactions between us and any of our directors or their respective affiliates, including loans by our directors, will be on terms believed by us at that time, based upon other similar
93
TABLE OF CONTENTS
arrangements known to us, to be no less favorable than are available from unaffiliated third parties. Such transactions or loans, including any forgiveness of loans, will require prior approval in each instance by a majority of our uninterested “independent” directors, to the extent we have independent directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. It is our intention to obtain estimates from unaffiliated third parties for similar goods or services to ascertain whether such transactions with affiliates are on
terms that are no less favorable to us than are otherwise available from such unaffiliated third parties. If a transaction with an affiliated third party were found to be on terms less favorable to us than with an unaffiliated third party, we would not engage in such transaction.
Anti-Dilution Protection
Our founders purchased 1,150,000 ordinary shares on July 18, 2007, an amount that is 20% of the total of the number of shares that will be outstanding after this offering, assuming that the underwriters exercise the over-allotment option in full. In the event that the over-allotment option is not exercised, we will redeem from our founders 150,000 ordinary shares so that founders shares do not constitute more than 20% of our outstanding ordinary shares immediately after this offering (not including shares underlying the private placement warrants). In addition, if the underwriters determine the size of the offering should be increased or decreased, a
share dividend, share combination or a contribution back to capital, as applicable, would be effectuated in order to maintain our founders’ ownership at 20% of the number of shares to be sold in this offering.
In the event that holders of more than 20% of the ordinary shares sold in this offering elect to redeem their shares, our existing shareholders have agreed to forfeit that number of shares (up to a maximum of 124,736) that will result in the number of shares owned by them prior to this offering collectively being no more than 23.81% of our outstanding ordinary shares immediately prior to the consummation of such business combination after giving effect to the redemption.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 50,000,000 ordinary shares, $0.001 par value, and 1,000,000 shares of undesignated preferred shares, $0.001 par value. Assuming no exercise of the underwriters’ over-allotment option, 5,000,000 ordinary shares will be outstanding following this offering. No preferred shares are or will be outstanding immediately following this offering. The following description summarizes the material terms of our capital securities. Because it is only a summary, it may not contain all the information that is important to you. For a complete description you should refer to our memorandum and articles of association, which are
filed as exhibits to the registration statement of which this prospectus is a part, and to the applicable provisions of Cayman Islands Law.
Units
Public Shareholders’ Units
Each unit consists of one ordinary shares and one warrant. Each warrant entitles the holder to purchase one ordinary share. The ordinary shares and warrant comprising the units will begin separate trading on the 45
th
day after the date of this prospectus, unless Broadband determines that an earlier date is acceptable, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin.
In no event will the ordinary shares and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds of this offering. We will file a Current Report on Form 8-K which includes this audited balance sheet upon the consummation of this offering.
Ordinary Shares
As of the date of this prospectus, there were 1,150,000 ordinary shares outstanding (which includes 150,000 ordinary shares that we will redeem from our founders to the extent that the underwriters do not exercise their over-allotment option) held by 3 shareholders of record. Upon closing of this offering (assuming no exercise of the underwriters’ over-allotment option), there will be 5,000,000 ordinary shares outstanding.
94
TABLE OF CONTENTS
Except for such voting rights that may be given to one or more series of preferred shares issued by the board of directors pursuant to the blank check power granted by our articles of association or required by law, holders of ordinary shares will have exclusive voting rights for the election of our directors and all other matters requiring shareholder action. Holders of ordinary shares will be entitled to one vote per share on matters to be voted on by shareholders and also will be entitled to receive such dividends, if any, as may be declared from time to time by our board of directors in its discretion out of funds legally available therefor. After
a business combination is concluded, if ever, and upon our subsequent dissolution, our shareholders will be entitled to receive pro rataall assets remaining available for distribution after payment of all liabilities and provision for the liquidation of any shares of preferred shares at the time outstanding. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors.
In connection with the vote required for the extended period or our initial business combination, our founders have agreed to vote the ordinary shares owned by them immediately before this offering in accordance with the majority of the ordinary shares voted by the public shareholders. Furthermore, our founders have agreed that it will vote any ordinary shares acquired by it in or after this offering in favor of the extended period or a proposed business combination. As a result, if any of such parties acquire shares in or after this offering, they must vote in favor of the extended period or proposed business combination with respect to those
shares, and will therefore waive the right to exercise the redemption rights granted to public shareholders. In connection with the vote required for the extended period or our initial business combination, a majority of our issued and outstanding ordinary shares (whether or not held by public shareholders) will constitute a quorum. Our founders have agreed to act together for the purpose of voting our shares. If any matters are voted on by our shareholders at an annual or special meeting, our founders may vote all their shares, whenever acquired, as they see fit. On consummation of our initial business combination, the underwriters will be entitled to receive the deferred underwriters’ discounts and commissions then held in the trust account, exclusive of interest thereon.
We will proceed with the business combination only if a majority of the ordinary shares voted are voted in favor of the business combination and public shareholders owning less than 30.0% of the shares sold in this offering exercise their redemption rights on a cumulative basis, taking into consideration shareholders redeeming their shares in connection with the proposal that may be presented to our shareholders in connection with the extended period. Voting against the business combination alone will not result in redemption of a shareholder’s shares for a pro ratashare of the trust account. A shareholder must have also exercised the redemption
rights for a redemption to be effective. In the event that holders of more than 20% of the ordinary shares sold in this offering elect to redeem their shares, our existing shareholders have agreed to forfeit that number of shares (up to a maximum of 124,736) that will result in the number of shares owned by them prior to this offering collectively being no more than 23.81% of our outstanding ordinary shares immediately prior to the consummation of such business combination after giving effect to the redemption.
If we liquidate prior to a business combination, we have agreed in the trust agreement governing the trust account that our public shareholders are entitled to share ratably in the trust account, inclusive of any interest not previously released to us to fund working capital requirements, and net of any income and franchise taxes due on such interest, which income or franchise taxes, if any, shall be paid from the trust fund, and any assets remaining available for distribution to them after payment of liabilities. Liquidation expenses will only be paid from funds held outside of the trust account. If we do not complete an initial business combination
and the trustee must distribute the balance of the trust account pursuant to the trust agreement, the underwriters have agreed that: (i) they will forfeit any rights or claims to their deferred underwriting discounts and commissions, including any accrued interest thereon, then in the trust account and (ii) the deferred underwriters’ discounts and commission will be distributed on a pro ratabasis among the public shareholders, together with any accrued interest thereon and net of income and franchise taxes payable on such interest. Each of our founders has agreed to waive his respective rights to participate in any liquidating distribution occurring upon our failure to consummate a business combination with respect to all ordinary shares owned by it before this offering.
Our shareholders have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the ordinary shares, except that public shareholders have the right
95
TABLE OF CONTENTS
to have their ordinary shares redeemed for cash equal to their pro ratashare of the trust account, plus any interest, if they vote (i) against the extended period, and it is approved, or (ii) against the business combination and the business combination is approved and completed. Public shareholders who cause us to redeem their ordinary shares for their pro ratashare of the trust account will retain the right to exercise any warrants they own if they previously purchased units or warrants.
The payment of dividends, if ever, on the ordinary shares will be subject to the prior payment of dividends on any outstanding preferred shares, of which there is currently none.
Preferred Shares
Our articles of association provides that preferred shares may be issued from time to time. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects. The ability of our board of
directors to issue preferred shares without shareholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no preferred shares outstanding at the date hereof. Although we do not currently intend to issue any preferred shares, we cannot assure you that we will not do so in the future. No preferred shares are being issued or registered in this offering.
Warrants
Public Shareholders’ Warrants
Each warrant entitles the registered holder to purchase one ordinary share at a price of $6.00 per share, subject to adjustment as discussed below, at any time commencing on the later of:
|
|
•
|
the consummation of a business combination; or
|
|
|
•
|
one year from the date of this prospectus,
|
provided in each case that there is an effective registration statement covering the ordinary shares underlying the warrants in effect.
The warrants will expire five years from the date of this prospectus at 5:00 p.m., New York time. Once the warrants become exercisable, we may redeem the outstanding warrants (without the consent of the representative of the underwriters), including the warrants underlying the unit purchase option if the unit purchase option has been exercised and the warrants are outstanding (not including the warrants issued in the private placement if such warrants are held by the original holder, the founders, or their permitted transferees):
|
|
•
|
in whole but not in part,
|
|
|
•
|
at a price of $0.01 per warrant,
|
|
|
•
|
upon not less than 30 days’ prior written notice of redemption to each warrant holder, and
|
|
|
•
|
if, and only if, the reported last sale price of the ordinary shares equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to warrant holders.
|
We have established these redemption criteria to provide warrant holders with a significant premium to the initial warrant exercise price as well as a sufficient degree of liquidity to cushion the market reaction, if any, to our redemption call. If the foregoing conditions are satisfied and we issue notice of redemption of the warrants, each warrant holder shall be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, there can be no assurance that the price of the ordinary shares will exceed the redemption trigger price or the warrant exercise price after the redemption notice is issued.
The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. You should review a copy of the warrant agreement and the amendments thereto, which have been filed as exhibits to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions of the warrants.
96
TABLE OF CONTENTS
The exercise price and number of ordinary shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or our recapitalization, merger or consolidation. However, the exercise price and number of ordinary shares issuable on exercise of the warrants will not be adjusted for issuances of ordinary shares at a price below the warrant exercise price.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified check payable to us, for the number of warrants being exercised. Warrant holders do not have the rights or privileges of holders of ordinary shares, including voting rights, until they exercise their warrants and receive ordinary shares. After the issuance of ordinary shares upon exercise of the warrants, each holder will be entitled to one
vote for each share held of record on all matters to be voted on by shareholders.
No warrants will be exercisable unless at the time of exercise we have a registration statement under the Securities Act in effect covering the ordinary shares issuable upon the exercise of the warrants and a current prospectus relating to those ordinary shares. Under the warrant agreement, we have agreed that prior to the commencement of the exercise period, we will file a registration statement with the SEC for the registration of the ordinary shares issuable upon exercise of the warrants, use our best efforts to cause the registration statement to become effective on or prior to the commencement of the exercise period and to maintain a current
prospectus relating to the ordinary shares issuable upon the exercise of the warrants until the warrants expire or are redeemed. However, we cannot assure you that we will be able to be able to keep the prospectus included in such registration statement current. In addition, we are not required to net-cash settle the warrants in the event that our shareholders are unable to exercise them. The warrants may be deprived of any value and the market for the warrants may be limited if there is no registration statement in effect covering the ordinary shares issuable upon the exercise of the warrants or if the prospectus relating to the ordinary shares issuable on the exercise of the warrants is not current.
No fractional shares will be issued upon exercise of the warrants. If a holder exercises warrants and would be entitled to receive a fractional interest of a share, we will round up the number of ordinary shares to be issued to the warrant holder to the nearest whole number of shares.
Private Placement Warrants
The private placement warrants will have terms and provisions that are substantially similar to the warrants included in the units being sold in this offering, except that these warrants (i) will not be transferable or salable by the original purchasers of the warrants or their permitted transferees until we consummate a business combination, (ii) will be non-redeemable so long as the original purchasers of the warrants or their permitted transferees hold such warrants and (iii) may be exercised on a cashless basis if held by the original holder, the founders or their permitted transferees. However, prior to the consummation of a business
combination, the original holders of the warrants will be permitted to transfer its private placement warrants by gift to an affiliate or a member of the immediate family of our officers or directors or to a trust or other entity, the beneficiary of which is one of our officers or directors or a member of the immediate family of our officers or directors; provided, however, that such permissive transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of the escrow agreement. The proceeds from the sale of the private placement warrants will be part of the funds distributed to our public shareholders in the event we are unable to complete a business combination. Pursuant to the registration rights agreement after the consummation of a business combination, we have agreed to file a registration statement with the SEC for the registration of the ordinary shares issuable upon exercise of the private placement warrants,
use our best efforts to cause the registration statement to become effective on or prior to the commencement of the exercise period and to maintain a current prospectus relating to the ordinary shares issuable upon the exercise of the private placement warrants until these warrants expire.
Dividends
We have not paid any dividends on our ordinary shares to date and we do not intend to pay cash dividends prior to the consummation of a business combination. After we complete a business combination, the payment of dividends will depend on our revenues and earnings, if any, capital requirements and general financial condition. The payment of dividends after a business combination will be within the discretion of our
97
TABLE OF CONTENTS
then-board of directors. Our board of directors currently intends to retain any earnings for use in our business operations and, accordingly, we do not anticipate the board declaring any dividends in the foreseeable future.
Our Transfer Agent and Warrant Agent
The transfer agent for our securities and warrant agent for our warrants is Continental Stock Transfer & Trust Company.
Mergers and Similar Arrangements
Cayman Islands law does not provide for mergers as that expression is understood under United States corporate law. However, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently
the arrangement must be sanctioned by the Grand Court of the Cayman Islands.
While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
|
|
•
|
the company is not proposing to act illegally or beyond the scope of its authority and the statutory provisions as to majority vote have been complied with;
|
|
|
•
|
the shareholders have been fairly represented at the meeting in question;
|
|
|
•
|
the arrangement is such that a businessman would reasonably approve; and
|
|
|
•
|
the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law or that would amount to a “fraud on the minority.”
|
When a take-over offer is made and accepted by holders of 90% of the shares within four months, the offerer may, within a two month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed unless there is evidence of fraud, bad faith or collusion. If the arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of United States corporations, providing rights to
receive payment in cash for the judicially determined value of the shares.
Shareholder Action; Special Meeting of Shareholders
Our articles of association provides that our shareholders will be able to take any action by written consent and will also be able to take action at duly called annual or special meetings of shareholders. Our memorandum and articles of association may further provide that special meetings of our shareholders may be only called by our board of directors with a majority vote of our board of directors, by our chief executive officer or our chairman.
Advance Notice Requirements for Shareholder Proposals and Director Nominations
Our Memorandum and Articles of Association provide that shareholders seeking to bring business before our annual meeting of shareholders (other than the nomination of candidates for election as directors), must provide timely notice of their intent in writing. To be timely, a shareholder’s notice will need to be delivered to our principal executive offices not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting of shareholders. For the first annual meeting of shareholders after the closing of this offering, a
shareholder’s notice shall be timely if delivered to our principal executive offices not later than the 90th day prior to the scheduled date of the annual meeting of shareholders or the 10th day following the day on which public announcement of the date of our annual meeting of shareholders is first made or sent by us. Our memorandum and articles of association also specify certain requirements as to the form and content of a shareholders’ meeting. These provisions may preclude our shareholders from bringing matters before our annual meeting of shareholders or from making nominations for directors at our annual meeting of shareholders.
98
TABLE OF CONTENTS
Authorized but Unissued Shares
Our authorized but unissued ordinary shares and preferred shares are available for future issuances without shareholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved ordinary shares and preferred shares could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Limitation on Liability and Indemnification of Directors and Officers
Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences or committing a crime. Our Articles of Association provide for indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such, except through their own fraud or dishonesty.
We have entered into or will enter into agreements with our directors to provide contractual indemnification in addition to the indemnification provided in our articles of association. We believe that these provisions and agreements are necessary to attract qualified directors. Our memorandum and articles of association also will permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Cayman Islands law would permit indemnification. We intend to purchase a policy of directors’ and officers’ liability insurance that insures our directors against
the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our directors.
These provisions may discourage shareholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We believe that these provisions, the insurance and the indemnity agreements are necessary to attract
and retain talented and experienced directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Securities Eligible for Future Sale
Upon consummation of this offering (assuming no exercise of the underwriters’ over-allotment option) we will have 5,000,000 ordinary shares outstanding. Of these shares, the 4,000,000 shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by our affiliates within the meaning of Rule 144 under the Securities Act. All of the remaining 1,000,000 shares (1,150,000 assuming the exercise of the over-allotment option in full) are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering. None
of those shares will be eligible for sale under Rule 144.
Rule 144
In general, under Rule 144 as currently in effect, a person who has beneficially owned restricted shares for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of either of the following:
|
|
•
|
1% of the total number of ordinary shares then outstanding, which will equal 50,000 shares immediately after this offering (or 57,500 if the underwriters exercise their over-allotment option in full); or
|
|
|
•
|
the average weekly trading volume of the ordinary shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
|
99
TABLE OF CONTENTS
Sales under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 144(k)
Under Rule 144(k), a person who is not deemed to have been one of our affiliates at the time of or at any time during the three months preceding a sale, and who has beneficially owned the restricted shares proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate, is entitled to sell their shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
SEC Position on Rule 144 Sales
The SEC has taken the position that promoters or affiliates of a blank check company and their transferees, both before and after a business combination, would act as “underwriters” under the Securities Act when reselling the securities of a blank check company. Based on that position, Rule 144 would not be available for resale transactions despite technical compliance with the requirements of Rule 144, and such securities can be resold only through a registered offering.
Registration Rights
Upon consummation of this offering, our founders will hold 1,150,000 issued and outstanding ordinary shares (which includes 150,000 ordinary shares that we will redeem from our founders to the extent the underwriters do not exercise the over-allotment option in full) and AEX Enterprises Limited, W.R. Hambrecht + Co., LLC and the Hambrecht 1980 Revocable Trust, companies controlled by Elizabeth R. Hambrecht, wife of Robert Eu, one of our founders and our Chairman and Secretary, and William R. Hambrecht, Mr. Eu’s father-in-law, Shea Ventures LLC, a company controlled by Edmund H. Shea Jr. and Marbella Capital Partners Ltd., a company controlled by
John Wang, our Chief Executive Officer, will hold the right to purchase 1,150,000 shares, underlying the private placement warrants. Elizabeth R. Hambrecht owns approximately 25% and William R. Hambrecht controls (through a trust of which he is trustee) approximately 38% of the voting shares of AEX Enterprises Limited. William Hambrecht is a controlling person of W.R. Hambrecht + Co., LLC and is the trustee of the Hambrecht 1980 Revocable Trust. Pursuant to a registration rights agreement between us, our founders and the original holders of the private placement warrants, our founders and the original holders of the private placement warrants, will be entitled to certain registration rights. Specifically, (i) the private placement warrants and the underlying ordinary shares will be entitled to certain registration rights immediately after the consummation of a business combination; and (ii) the founders’ ordinary shares will be entitled to certain registration rights one year from
the consummation of a business combination. We are only required to use our best efforts to cause a registration statement relating to the resale of such securities to be declared effective and, once effective, only to use our best efforts to maintain the effectiveness of the registration statement. The holders of warrants do not have the rights or privileges of holders of our ordinary shares or any voting rights until such holders exercise their respective warrants and receive ordinary shares. Certain persons and entities that receive any of the above described securities from our founders will, under certain circumstances, be entitled to the registration rights described herein. We will bear the expenses incurred in connection with the filing of any such registration statements. In the event that we breach our obligations under the registration rights agreement, we could be obligated to purchase the securities owned by our founders for the then fair market value of the securities.
100
TABLE OF CONTENTS
CAYMAN ISLANDS COMPANY CONSIDERATIONS
Our corporate affairs are governed by our Amended and Restated Memorandum and Articles of Association and by the Companies Law (2007 Revision) of the Cayman Islands. The Companies Law of the Cayman Islands is modeled on English Law but does not follow recent English Law statutory enactments, and differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of some significant differences between the provisions of the Companies Law applicable to us and the laws applicable to companies incorporated in the United States and their shareholders. A brief discussion of the procedure for mergers and similar
arrangements in the Cayman Islands also follows.
There have been few, if any, court cases interpreting the Companies Law in the Cayman Islands, and we cannot predict whether Cayman Islands courts would reach the same conclusions as U.S. courts. Therefore, you may have more difficulty in protecting your interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction which has developed a substantial body of case law. The following table provides a comparison between the statutory provisions of the Companies Law and the Delaware General Corporation Law relating to shareholders’ rights.
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Shareholder Meetings
|
• Held at a time and place as designated in the
Articles of Association
• May be held within or without the Cayman Islands
• Notice:
• Whenever shareholders are required to take
action at a meeting, written notice shall state the
place, date and hour of the meeting and indicate
that it is being issued by or at the direction of
the person calling the meeting
• A copy of the notice of any meeting shall be
given personally or sent by mail as designated in
the Articles of Association
|
|
• Held at such time or place as designated in
the certificate of incorporation or the by-laws, or if
not so designated, as determined by the board of
directors
• May be held within or without Delaware
• Notice:
• Whenever shareholders are required to take any
action at a meeting, a written notice of the
meeting shall be given which shall state the
place, if any, date and hour of the meeting, and
the means of remote communication, if any
• Written notice shall be given not less than 10 nor
more than 60 days before the meeting
|
Shareholders’ Voting Rights
|
• Any action required to be taken by meeting of
shareholders may be taken without meeting if
consent is in writing and is signed by all the
shareholders entitled to vote if permitted by the
Articles of Association
• Any person authorized to vote may authorize
another person or persons to act for him by
proxy if permitted by the Articles of Association
• Quorum is as designated in the Articles of
Association.
• The Memorandum and Articles of Association may
provide for cumulative voting in the election of
directors
|
|
• Any action required to be taken by meeting of
shareholders may be taken without meeting if
consent is in writing and is signed by all the
shareholders entitled to vote
• Any person authorized to vote may authorize
another person or persons to act for him by proxy
• For stock corporations, certificate of incorporation
or by-laws may specify the number to constitute a
quorum but in no event shall a quorum consist of
less than one-third of shares entitled to vote at a
meeting. In the absence of such specifications, a
majority of shares entitled to vote shall constitute a
quorum
• The certificate of incorporation may provide for
cumulative voting
|
101
TABLE OF CONTENTS
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Directors
|
• Board must consist of at least one member
• Maximum number of directors can be changed by
an amendment to the Articles of Association.
• If the board is authorized to change the number of
directors actually appointed, provided that the
number still falls within the maximum and the
minimum number of directors as set out in the
Articles of Association, it can do so provided that
it complies with the procedure set out in the
Articles of Association.
|
|
• Board must consist of at least one member
• Number of board members shall be fixed by the
by-laws, unless the certificate of incorporation fixes
the number of directors, in which case a change in
the number shall be made only by amendment of
the certificate
|
|
Fiduciary Duties
|
• In summary, directors and officers owe the
following fiduciary duties:
• Duty to act in good faith in what the directors
believe to be in the best interests of the
company as a whole;
• Duty to exercise powers for the purposes for
which those powers were conferred;
• Duty to exercise powers fairly as between
different groups of shareholders;
• Duty not to put himself in a position of conflict;
and
• Duty to exercise independent judgment
• In addition to the above, directors also owe a duty
of care which is
not fiduciary in nature. This duty
has been defined as a requirement to act as
“a reasonably diligent person having both:
• the general knowledge, skill and experience that
may reasonably be expected of a person carrying
out the same functions as are carried out by that
director in relation to the company, and
• the general knowledge, skill and experience that
that director has”.
• As set out above, directors have a duty not to put
themselves in a position of conflict and this
includes a duty not to engage in self-dealing, or to
otherwise benefit as a result of his position. How
ever, in some instances a breach of this duty can
be forgiven and/or authorized
in advance by the
shareholders provided that there is full disclosure
by the directors. This can be done by way of
permission granted in the Articles of Association or
alternatively by shareholder approval at general
meetings.
|
|
• Directors and officers must act in good faith, with
the care of a prudent person, and in the best
interest of the corporation as a whole.
• Directors and officers must refrain from self-
dealing, usurping corporate opportunities and
receiving improper personal benefits.
• Decisions made by directors and officers on an
informed basis, in good faith and in the honest
belief that the action was taken in the best interest
of the corporation will be protected by the
“business judgment rule.”
|
102
TABLE OF CONTENTS
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Shareholders’ Derivative Actions
|
• Generally speaking, the company is the proper
plaintiff in any action. Derivative actions brought
by one or more of the registered shareholders may
only be brought with the leave of the Grand Court
where the following circumstances apply:
• Those who control the company have refused a
request by the shareholders to move the
company to bring the action;
• Those who control the company have refused to
do so for improper reasons such that they are
perpetrating a “fraud on the minority” (this is a
legal concept and is different to “fraud” in the
sense of
dishonesty);
• a company is acting or proposing to act illegally
or beyond the scope of its authority;
• the act complained of, although not beyond the
scope of the authority, could only be effected if
duly authorized by more than the number of
votes which have actually been obtained; or
• the individual rights of the plaintiff shareholder have been infringed or are about to be infringed.
|
|
• In any derivative suit instituted by a shareholder of
a corporation, it shall be averred in the complaint
that the plaintiff was a shareholder of the
corporation at the time of the transaction of which
he complains or that such shareholder’s stock
thereafter devolved upon such shareholder by
operation of law.
• Complaint shall set forth with particularity the
efforts of the plaintiff to obtain the action by the
board or the reasons for not making such effort.
• Such action shall not be dismissed or compromised
without the approval of the Chancery Court.
• If we were a Delaware corporation, a shareholder
that redeemed his, her or its shares, or whose
shares were canceled in connection with our
dissolution, would not be able to bring a derivative
action against us after the shares have been
redeemed or canceled.
|
• Once a shareholder has relinquished his, her or
its shares (whether by redemption or otherwise),
it is generally the case that they could no longer
bring a derivative action as they would no
longer be a registered shareholder.
|
Mergers and Similar Arrangements
Cayman Islands law does not provide for mergers as that expression is understood under United States corporate law. There are statutory provisions that facilitate the reconstruction and amalgamation of companies in certain circumstances, which may be tantamount to a merger, but we do not anticipate the use of such statutory provisions because a business combination can be achieved through other means, such as a share capital exchange, asset acquisition or control, through contractual arrangements, of an operating business. However, in the event that a business combination was sought pursuant to these statutory provisions, the arrangement in question
must be approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meeting summoned for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder would have the right to express to the court the view that the transaction ought not be approved, the court can be expected to approve the arrangement if it satisfies itself that:
|
|
•
|
the company is not proposing to act illegally or beyond the scope of its authority and the statutory provisions as to majority vote have been complied with;
|
|
|
•
|
the shareholders have been fairly represented at the meeting in question;
|
|
|
•
|
the arrangement is such as a businessman would reasonably approve; and
|
103
TABLE OF CONTENTS
|
|
•
|
the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law or that would amount to a “fraud on the minority.”
|
When a takeover offer is made and accepted by holders of 90.0% of the shares within four months, the offer or may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed unless there is evidence of fraud, bad faith or collusion.
If the arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of United States corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
TAXATION
The following summary of the material Cayman Islands and United States federal income tax consequences of an investment in ordinary shares and warrants is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares and warrants, such as the tax consequences under state, local and other tax laws.
Cayman Islands Taxation
The Government of the Cayman Islands will not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon the company or its shareholders. The Cayman Islands are not party to any double taxation treaties.
No Cayman Islands stamp duty will be payable by you in respect of the issue or transfer of ordinary shares or warrants. However, an instrument transferring title to an ordinary share or warrant, if brought to or executed in the Cayman Islands, would be subject to Cayman Islands stamp duty.
We have applied for and can expect to receive an undertaking from the Governor-in-Cabinet of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on the shares, debentures or other obligations of the company or
(ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by the company to its members or a payment of principal or interest or other sums due under a debenture or other obligation of the company.
United States Federal Income Taxation
General
The following is a summary of the material U.S. federal income tax consequences of the acquisition, ownership, and disposition of our ordinary shares and warrants issued pursuant to this offering. The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to a beneficial owner of ordinary shares or warrants that is for U.S. federal income tax purposes:
|
|
•
|
an individual citizen or resident of the United States;
|
|
|
•
|
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;
|
|
|
•
|
an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
|
104
TABLE OF CONTENTS
|
|
•
|
a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
|
If a beneficial owner of our ordinary shares and warrants is not described as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, such owner will be considered a “Non-U.S. Holder.” The U.S. federal income tax consequences applicable specifically to Non-U.S. Holders is described below under the heading “Non-U.S. Holders.”
This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed Treasury regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis.
This summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a person’s decision to purchase our ordinary shares and warrants. This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder’s individual circumstances, and this discussion addresses only persons that acquire our ordinary shares and warrants as part of units upon their original issuance pursuant to this offering and assumes that each of our ordinary shares and warrants trade separately. In particular, this discussion considers only
holders that will own our ordinary shares and warrants as capital assets and does not address the potential application of the alternative minimum tax or the U.S. federal income tax consequences to holders that are subject to special rules, including:
|
|
•
|
financial institutions or “financial services entities”;
|
|
|
•
|
taxpayers who have elected mark-to-market accounting;
|
|
|
•
|
governments or agencies or instrumentalities thereof;
|
|
|
•
|
regulated investment companies;
|
|
|
•
|
real estate investment trusts;
|
|
|
•
|
certain expatriates or former long-term residents of the United States;
|
|
|
•
|
persons that actually or constructively own 10% or more of our voting shares;
|
|
|
•
|
persons that hold our ordinary shares or warrants as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or
|
|
|
•
|
persons whose functional currency is not the U.S. dollar.
|
This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws. Additionally, the discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our ordinary shares or warrants through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our ordinary shares and warrants, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the
partnership.
We have not sought, and will not seek, a ruling from the Internal Revenue Service (“IRS”) or an opinion of counsel as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court.
105
TABLE OF CONTENTS
BECAUSE OF THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR INVESTOR MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT WITH ITS TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES AND WARRANTS, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS.
Allocation of Purchase Price Between Ordinary Shares and Warrants
For U.S. federal income tax purposes, each holder of a unit generally must allocate the purchase price of a unit between the ordinary share and the warrant that comprise the unit based on their respective relative fair market values at the time of the issuance. Of the purchase price for a unit offered hereunder, we intend to allocate U.S.$[• ] to the ordinary share and U.S.$[• ] to the warrant comprising part of such unit. The price allocated to the ordinary share and the warrant generally will be the holder’s initial tax basis in such share or warrant, as the case may be. While uncertain, the IRS, by analogy to
the rules relating to the allocation of the purchase price to components of a unit consisting of debt and equity, may take the position that our allocation of the purchase price will be binding on a holder of a unit, unless the holder explicitly discloses in a statement attached to the its timely filed U.S. federal income tax return for the taxable year that includes the acquisition date of the unit that the holder’s allocation of the purchase price between the ordinary share and the warrant that comprise the unit is different than our allocation. Our allocation is not, however, binding on the IRS.
Each holder is advised to consult such holder’s own tax advisor with respect to the risks associated with an allocation of the purchase price between each ordinary shares and the warrant that comprise a unit that is inconsistent with our allocation of the purchase price.
U.S. Holders
Tax Reporting
Certain U.S. Holders will be required to file an IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) to report a transfer of cash or other property to us. Substantial penalties may be imposed on a U.S. Holder that fails to comply with this reporting requirement. Each U.S. Holder is urged to consult with its own tax advisor regarding this reporting obligation.
Taxation of Distributions Paid on Ordinary Shares
Subject to the passive foreign investment company (“PFIC”) rules discussed below, a U.S. Holder will be required to include in gross income as ordinary income the amount of any dividend paid on our ordinary shares. A distribution on our ordinary shares will be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Such dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.
Distributions in excess of such earnings and profits will be applied against and reduce the U.S. Holder’s basis in its ordinary shares and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such ordinary shares.
With respect to non-corporate U.S. Holders for taxable years beginning before January 1, 2011, dividends may be taxed at the lower applicable long-term capital gains rate (see “ — Taxation on the Disposition of Ordinary Shares and Warrants” below) provided that (1) our ordinary shares are readily tradable on an established securities market in the United States, (2) we are not a PFIC, as discussed below, for either the taxable year in which the dividend was paid or the preceding taxable year, and (3) certain holding period requirements are met. It is not entirely clear, however, whether a U.S. Holder’s holding period for
our ordinary shares would be suspended for purposes of clause (3) above for the period that such holder had a right to have such ordinary shares redeemed by us. In addition, under recently published IRS authority, ordinary shares are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United States only if they are listed on certain exchanges, which presently do not include the OTC Bulletin
106
TABLE OF CONTENTS
Board (the only exchange on which our ordinary shares are currently expected to be traded). Accordngly, any dividends paid on ordinary shares are not currently expected to qualify for the lower rate. U.S. Holders nevertheless should consult their own tax advisors regarding the availability of the lower rate for any dividends paid with respect to our ordinary shares.
Taxation on the Disposition of Ordinary Shares and Warrants
Upon a sale or other taxable disposition of our ordinary shares or warrants (which, in general, would include a redemption of ordinary shares or warrants), and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in the ordinary shares or warrants. See “— Exercise or Lapse of a Warrant” below for a discussion regarding a U.S. Holder’s basis in the ordinary shares acquired pursuant to the exercise of a warrant.
Capital gains recognized by U.S. Holders generally are subject to U.S. federal income tax at the same rate as ordinary income, except that long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax at a maximum rate of 15% for taxable years beginning before January 1, 2011 (and 20% thereafter). Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder’s holding period for the ordinary shares or warrants exceeds one year. The deductibility of capital losses is subject to various limitations.
Exercise or Lapse of a Warrant
Subject to the discussion of the PFIC rules below, a U.S. Holder generally will not recognize gain or loss upon the exercise of a warrant. Ordinary shares acquired pursuant to the exercise of a warrant for cash generally will have a tax basis equal to the U.S. Holder’s tax basis in the warrant, increased by the amount paid to exercise the warrant. The holding period of such ordinary shares generally would begin on the day after the date of exercise of the warrant. If the terms of a warrant provide for any adjustment to the number of shares of ordinary shares for which the warrant may be exercised or to the exercise price of the warrants, such
adjustment may, under certain circumstances, result in constructive distributions that could be taxable to the U.S. Holder of the warrants. Conversely, the absence of an appropriate adjustment similarly may result in a constructive distribution that could be taxable to the U.S. Holders of the ordinary shares. See “ — Taxation of Distributions Paid on Ordinary Shares,” above. If a warrant is allowed to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.
Passive Foreign Investment Company Rules
A foreign corporation will be a passive foreign investment company, or PFIC, if at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any company in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any company in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive
income. Passive income generally includes dividends, interest, rents, royalties, and gains from the disposition of passive assets.
Because we are a blank check company, with no current active business, we believe that it is likely that we will meet the PFIC asset or income test for the current taxable year. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the start-up year; and (3) the corporation is not in fact a PFIC for either of those years. The applicability of the start-up exception to us is uncertain. After acquisition
of a company or assets in a business combination, we may still meet one of the PFIC tests depending on the timing of the acquisition and the amount of our passive income and assets and the passive income and assets of the acquired business. If the company that we acquire in a business combination is a PFIC, then we will likely not qualify for the start-up exception and will be a PFIC for the current taxable year. Our actual PFIC status for any taxable year will not be determinable until after the end of the taxable year, and accordingly there can be no assurance that we will not be considered a PFIC for the current taxable year or any future taxable year.
107
TABLE OF CONTENTS
If we are a PFIC for any taxable year during which a U.S. Holder held our ordinary shares or warrants, and the U.S. Holder did not make a timely qualified electing fund (“QEF”) election for the first taxable year of its holding period for our ordinary shares or a mark-to-market election, as described below, such holder will be subject to special rules with respect to:
|
|
•
|
any gain recognized by the U.S. Holder on the sale or other taxable disposition of its ordinary shares or warrants; and
|
|
|
•
|
any excess distribution made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the ordinary shares during the three preceding taxable years or, if shorter, such U.S. Holder’s holding period for the ordinary shares).
|
Under these rules,
|
|
•
|
the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares or warrants;
|
|
|
•
|
the amount allocated to the taxable year in which the U.S. Holder recognized the gain or excess distribution will be taxed as ordinary income;
|
|
|
•
|
the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
|
|
|
•
|
the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.
|
In addition, if we are a PFIC, a U.S. Holder who acquires our ordinary shares or warrants from a deceased U.S. Holder who dies before January 1, 2010 generally will be denied the step-up of U.S. federal income tax basis in such shares or warrants to their fair market value at the date of the deceased holder’s death. Instead, such U.S. Holder would have a tax basis in such shares or warrants equal to the deceased holder’s tax basis, if lower.
In general, a U.S. Holder may avoid the PFIC tax consequences described above in respect of our ordinary shares acquired as part of a unit in this offering by making a timely QEF election to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.
A U.S. Holder may not make a QEF election with respect to its warrants. As a result, if a U.S. Holder sells or otherwise disposes of a warrant (other than upon exercise of a warrant), any gain recognized generally will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if we were a PFIC at any time during the period the U.S. Holder held the warrants. If a U.S. Holder that exercises such warrants properly makes a QEF election with respect to the newly acquired ordinary shares (or has previously made a QEF election with respect to our ordinary shares), the QEF election will apply to
the newly acquired ordinary shares, but the adverse tax consequences relating to PFIC shares will continue to apply with respect to such ordinary shares (which generally will be deemed to have a holding period for the purposes of the PFIC rules that includes the period the U.S. Holder held the warrants), unless the U.S. Holder makes a purging election. The purging election creates a deemed sale of such shares at their fair market value. The gain recognized by reason of the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will have a new basis and holding period in the ordinary shares acquired upon the exercise of the warrants for purposes of the PFIC rules.
The QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching an appropriately completed IRS Form 8621 (Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed
108
TABLE OF CONTENTS
U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS.
In order to comply with the requirements of a QEF election, a U.S. Holder must receive certain information from us. Upon request from a U.S. Holder, we will endeavor to provide to the U.S. Holder no later than 90 days after the request such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that we will have timely knowledge of our status as a PFIC in the future or of the required information to be provided.
If a U.S. Holder has elected the application of the QEF rules to our ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for the first tax year of the U.S. Holder’s holding period for our ordinary shares or a purge of the PFIC taint pursuant to a purging election), any gain recognized on the appreciation of our ordinary shares generally will be taxable as capital gain and no interest charge will be imposed. As discussed above, U.S. Holders of a QEF are currently taxed on their pro rata shares of its earnings and profits, whether or not distributed. In such case, a
subsequent distribution of such earnings and profits that were previously included in income generally will not be taxable as a dividend. The tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF.
Although a determination as to our PFIC status will be made annually, an initial determination that we are a PFIC will generally apply for subsequent years to a U.S. Holder who held ordinary shares while we were a PFIC, whether or not we meet the test for PFIC status in those years. A U.S. Holder who makes the QEF election discussed above for our first tax year in which the U.S. Holder holds (or is deemed to hold) our ordinary shares and for which we are determined to be a PFIC, however, will not be subject to the PFIC tax and interest charge rules (or the denial of basis step-up at death) discussed above in respect to such shares. In addition, such
U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for the tax years in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our tax years in which we are a PFIC and the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will continue to apply to such shares unless the holder makes a purging election and pays the tax and interest charge with respect to the gain inherent in such shares attributable to the pre-QEF election period.
Alternatively, if a U.S. Holder owns ordinary shares in a PFIC that is treated as marketable stock, the U.S. Holder may make a mark-to-market election. If the U.S. Holder makes a valid mark-to-market election for the first tax year in which the U.S. Holder holds (or is deemed to hold) our ordinary shares and for which we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its ordinary shares. Instead, in general, the U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of its ordinary shares at the end of its taxable year over the adjusted
basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its ordinary shares over the fair market value of its ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary shares will be treated as ordinary income. Currently, a mark-to-market election may not be made with respect to warrants.
The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission or on Nasdaq, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. Since we expect that our ordinary shares will be listed and traded on the OTC Bulletin Board, our ordinary shares may not currently qualify as marketable stock for purposes of
109
TABLE OF CONTENTS
this election. As a result, U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to our ordinary shares under their particular circumstances.
If we are a PFIC and, at any time, have a non-U.S. subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC. Upon request, we will endeavor to cause any lower-tier PFIC to provide to a U.S. Holder no later than 90 days after the request the information that may be required to make or maintain a QEF election with respect to the lower-tier PFIC. U.S. Holders are urged to consult their
own tax advisors regarding the tax issues raised by lower-tier PFICs.
If a U.S. Holder owns (or is deemed to own) shares during any year in a PFIC, such holder may have to file an IRS Form 8621 (whether or not a QEF or mark-to-market election is made).
The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of our ordinary shares and warrants should consult their own tax advisors concerning the application of the PFIC rules to their acquisition, ownership and disposition of our ordinary shares and warrants under their particular circumstances.
Non-U.S. Holders
Dividends paid to a Non-U.S. Holder in respect to its ordinary shares generally will not be subject to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains in the United States).
In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our ordinary shares or warrants unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of sale or other disposition and certain other conditions are met (in which case, such gain from
United States sources generally is subject to tax at a 30% rate or a lower applicable tax treaty rate).
Dividends and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base in the United States) generally will be subject to tax in the same manner as for a U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.
Backup Withholding and Information Reporting
In general, information reporting for U.S. federal income tax purposes will apply to distributions made on our ordinary shares within the United States to a non-corporate U.S. Holder and to the proceeds from sales and other dispositions of our ordinary shares or warrants to or through a U.S. office of a broker by a non-corporate U.S. Holder. Payments made (and sales and other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances.
In addition, backup withholding of United States federal income tax, currently at a rate of 28%, generally will apply to dividends paid on our ordinary shares to a non-corporate U.S. Holder and the proceeds from sales and other dispositions of shares or warrants by a non-corporate U.S. Holder, in each case who:
|
|
•
|
fails to provide an accurate taxpayer identification number;
|
|
|
•
|
is notified by the IRS that backup withholding is required; or
|
|
|
•
|
in certain circumstances, fails to comply with applicable certification requirements.
|
110
TABLE OF CONTENTS
A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder’s or a Non-U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely furnished to the IRS.
UNDERWRITING
Broadband Capital Management LLC is acting as sole bookrunning manager of this offering and representative of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement, each underwriter named below has agreed to purchase and we have agreed to sell to that underwriter, the number of units set forth opposite the underwriter’s name.
|
|
|
|
|
Underwriters
|
|
Number of
Units
|
|
Broadband Capital Management LLC
|
|
|
|
|
|
Total
|
|
|
4,000,000
|
|
The underwriting agreement provides that the obligations of the underwriters are conditional and may be terminated if any domestic or international event or act or occurrence has materially disrupted, or in the representatives’ sole opinion will in the immediate future materially disrupt, general securities markets in the United States. The obligations of the underwriters may also be terminated upon the occurrence of events specified in the underwriting agreement. The underwriters have agreed, severally and not jointly, to purchase all of the units sold under the underwriting agreement if any of the units are purchased, other than the units
covered by the over-allotment option and the purchase option described below. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.
We have agreed to indemnify the underwriters against specified liabilities, including civil liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect thereof.
The underwriters are offering the units, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel and other conditions specified in the underwriting agreement. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
State Blue Sky Information.
We will offer and sell the units to retail customers only in Colorado, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Louisiana, New York, Rhode Island and Wyoming. We have applied to have the units registered for sale, or we are relying on exemptions from registration in the states mentioned above. In states that require registration, we will not sell the units to retail customers in these states until such registration is effective in each of these states (including in Colorado, pursuant to 11-51-302(6) of the Colorado Revised Statutes).
If you are not an institutional investor, you may purchase our securities in this offering only in the jurisdictions described directly above. Institutional investors in every state except in Idaho may purchase the units in this offering pursuant to exemptions provided to such entities under the Blue Sky laws of various states. The definition of an “institutional investor” varies from state to state but generally includes financial institutions, broker-dealers, banks, insurance companies and other qualified entities.
The National Securities Markets Improvement Act of 1996 (“NSMIA”), which is a federal statute, prevents or preempts the states from regulating transactions in certain securities, which are referred to as “covered securities”. This federal statute does allow the states to investigate companies if there is a suspicion of fraud, and if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.
State securities laws either require that a company’s securities be registered for sale or that the securities themselves or the transaction under which they are issued, are exempt from registration. When a state law
111
TABLE OF CONTENTS
provides an exemption from registration, it is excusing an issuer from the general requirement to register securities before they may be sold in that state. States, may by rule or regulation, place conditions on the use of exemptions, so that certain companies may not be allowed to rely on the exemption for the sale of their securities. If an exemption is not available and the securities the company wishes to sell are not covered securities under the federal statute, then the company must register its securities for sale in the state in question.
We will file periodic and annual reports under the Exchange Act. Therefore, under NSMIA, the states and territories of the United States are preempted from regulating the resale by shareholders of the units, from and after the effective date, and the ordinary shares and warrants comprising the units, once they become separately transferable, because our securities will be covered securities. However, NSMIA does allow states and territories of the United States to require notice filings and collect fees with regard to these transactions and a state may suspend the offer and sale of securities within such state if any such required filing is not made
or fee is not paid. As of the date of this prospectus, the following states do not require any notice filings or fee payments and shareholders may resell the units, and the ordinary shares and warrants comprising the units, once they become separately transferable:
Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Utah, Virginia, Virgin Islands, Washington, West Virginia, Wisconsin and Wyoming.
Additionally, the shareholders may resell the units, and the ordinary shares and warrants comprising the units, once they become separately transferable, if the proper notice filings have been made and fees paid in the following states: District of Columbia, Illinois, Maryland, Michigan, Montana, New Hampshire, North Dakota, Oregon, Puerto Rico, Rhode Island, Tennessee, Texas and Vermont.
As of the date of this prospectus, we have not determined in which, if any, of these states we will submit the required filings or pay the required fee. Additionally, if any of the states that have not yet adopted a statute, rule or regulation relating to the National Securities Markets Improvement Act adopts such a statute in the future requiring a filing or fee or if any state amends its existing statutes, rules or regulations with respect to its requirements, we would need to comply with those new requirements in order for the securities to continue to be eligible for resale in those jurisdictions.
In addition, we believe that the units, from and after the effective date, and the ordinary shares and warrants comprising the units, once they become separately transferable, may be eligible for sale on a secondary market basis in various states, without any notice filings or fee payments, based upon the availability of an applicable exemption from the state’s registration requirements:
|
|
•
|
commencing 90 days after the date of this prospectus in Nevada; and
|
|
|
•
|
commencing 180 days from the date of this prospectus in Alabama.
|
Despite the exemption from state registration provided by the National Securities Markets Improvement Act described above, the state of Idaho has advised us that it does not recognize this act as a basis for exempting registration of resales therein of securities issued in blank check offerings.
We do not intend to register the resale of the securities sold in this offering in these states.
Over-Allotment Option to Purchase Additional Units.
We have granted to the underwriters an option to purchase up to an aggregate of 600,000 additional units at the public offering price, less the underwriting discount. This option is exercisable for a period of 45 days. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the sale of units offered hereby. To the extent that the underwriters exercise this option, the underwriters will purchase additional units from us in approximately the same proportion as shown in the table above.
Purchase Option.
We have agreed to sell to the representatives for $100, an option to purchase up to 280,000 units at $10.00 per unit. The units issuable upon exercise of this option are identical to those offered by this prospectus. This option commences on the later of the consummation of a business combination or
112
TABLE OF CONTENTS
180-days from the date of this prospectus and expiring five years from the date of this prospectus. The option and the 280,000 units, the 280,000 ordinary shares and the 280,000 warrants underlying such units, and the 280,000 ordinary shares underlying such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 2710(g)(1) of FINRA Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a 180-day period (including the foregoing 180-day period) following the date of this prospectus. However, the option may be transferred to any underwriter and
selected dealer participating in the offering and their bona fide officers or partners. Thereafter, such units will be transferable provided such transfer is in accordance with the provisions of the Securities Act of 1933. Although the purchase option and its underlying securities have been registered under the registration statement of which this prospectus forms a part, the option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the date of this prospectus with respect to the registration under the Securities Act of 1933 of the securities directly and indirectly issuable upon exercise of the option. We will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or
our recapitalization, merger or consolidation. However, the option will not be adjusted for issuances of ordinary shares at a price below its exercise price. We will set aside and at all times have available a sufficient number of ordinary shares to be issued upon exercise of such units.
Discounts and Commissions.
The following table shows the public offering price, underwriting discount and proceeds, before expenses, to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional units
We estimate that the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $420,000 and are payable by us.
|
|
|
|
|
|
|
|
|
|
|
Per
Unit
|
|
Without
Over-Allotment
|
|
With
Over-allotment
|
|
Public offering price
|
|
$
|
8.00
|
|
|
$
|
32,000,000
|
|
|
$
|
36,800,000
|
|
|
Discount
(1)
(2)
|
|
|
0.32
|
|
|
|
1,280,000
|
|
|
|
1,472,000
|
|
|
Deferred underwriting compensation
(1)
(3)
|
|
|
0.24
|
|
|
|
960,000
|
|
|
|
1,104,000
|
|
|
Proceeds before expenses
|
|
$
|
7.44
|
|
|
$
|
29,760,000
|
|
|
$
|
34,224,000
|
|
|
|
(1)
|
Does not include deferred underwriting compensation in the amount of 3.0% of the gross proceeds, or $0.24 per unit, or $960,000 ($1,104,000 if the underwriters’ over-allotment option is exercised in full), payable to the representatives, only upon completion of the initial business combination as described in this prospectus and then only with respect to those units as to which the component shares have not been redeemed. No interest will be paid in connection with the deferred portion of the underwriting compensation.
|
|
|
(2)
|
No discount or commissions are payable with respect to the private warrants purchased in the private placement.
|
|
|
(3)
|
The representative has agreed to forego their deferred underwriting compensation with respect to each share that we redeem for cash upon the consummation of a business combination.
|
The underwriters propose to offer the units to the public at the public offering price set forth on the cover of this prospectus. The underwriters may offer the units to securities dealers at the public offering price less a concession not in excess of $0.___ per unit. The underwriters may allow, and the dealers may reallow, a discount not in excess of $0.___ per unit to other dealers. If all of the units are not sold at the public offering price, the underwriters may change the offering price and other selling terms.
Discretionary Accounts.
The underwriters do not intend to confirm sales of the units to any accounts over which they have discretionary authority.
Pricing.
Prior to this offering there has been no public market for any of our securities. The initial public offering price of the units and the terms of the warrants has been determined by negotiations between
113
TABLE OF CONTENTS
us and the representatives of the underwriters. Factors considered in determining the prices and terms of the units, including the ordinary shares and warrants underlying the units, include:
|
|
•
|
the history and prospects of companies whose principal business is the acquisition of other companies;
|
|
|
•
|
prior offerings of those companies;
|
|
|
•
|
our prospects for acquiring an operating business at attractive values;
|
|
|
•
|
an assessment of our management and their experience in identifying operating companies;
|
|
|
•
|
general conditions of the securities markets at the time of the offering; and
|
|
|
•
|
other factors as were deemed relevant.
|
However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since the underwriters are unable to compare our financial results and prospects with those of public companies operating in the same industry.
Currently, no public market exists for our units, ordinary shares or warrants. We anticipate being quoted on the OTC Bulletin Board under the symbol “[_____U]” upon consummation of this offering. The units will begin trading on or promptly after the date of this prospectus. Each of the ordinary shares and warrants will trade separately on the 45th day after the date of this prospectus (unless Broadband Capital Management LLC, the representative of the underwriters, determines that an earlier date is acceptable), subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or SEC, including an audited
balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. We expect that once the securities comprising the units begin separate trading, the ordinary shares and warrants will be quoted on the OTC Bulletin Board under the symbols “[____]” and “[_____W],” respectively.
Stabilization.
In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions, penalty bids and purchases to cover positions created by short sales.
|
|
•
|
Stabilizing transactions permit bids to purchase shares of units so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding a decline in the market price of the units while the offering is in progress.
|
|
|
•
|
Overallotment transactions involve sales by the underwriters of units in excess of the number of units the underwriters are obligated to purchase. This creates a syndicate short position which may be either a covered short position or a naked short position. In a covered short position, the number of units over-allotted by the underwriters is not greater than the number of units that they may purchase in the over-allotment option. In a naked short position, the number of units involved is greater than the number of units in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment option and/or purchasing units in the open market.
|
|
|
•
|
Syndicate covering transactions involve purchases of units in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of units to close out the short position, the underwriters will consider, among other things, the price of units available for purchase in the open market as compared with the price at which they may purchase units through exercise of the over-allotment option. If the underwriters sell more units than could be covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying units in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there could be downward pressure on the price of the units in the open market that could adversely affect investors who purchase in the offering.
|
114
TABLE OF CONTENTS
|
|
•
|
Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the units originally sold by that syndicate member is purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.
|
These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our ordinary shares or preventing or retarding a decline in the market price of our units. As a result, the price of our units in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our units. These transactions may be effected in the over-the-counter market or otherwise and, if commenced, may be discontinued at any
time.
Electronic Offer, Sale and Distribution of Shares.
A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same
basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.
Other Relationships.
Although there is no present intention to do so, certain of the underwriters and their affiliates may provide, various investment banking, commercial banking and other financial services for our affiliates for which they received, and may in the future receive, customary fees.
Foreign Regulatory Restrictions on Purchase of the Units
We have not taken any action to permit a public offering of the units outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to this offering of units and the distribution of the prospectus outside the United States.
Italy
. This offering of the units has not been cleared by Consob, the Italian Stock Exchange’s regulatory agency of public companies, pursuant to Italian securities legislation and, accordingly, no units may be offered, sold or delivered, nor may copies of this prospectus or of any other document relating to the units be distributed in Italy, except (1) to professional investors (
operatori qualificati
); or (2) in circumstances which are exempted from the rules on solicitation of investments pursuant to Decree No. 58 and Article 33, first paragraph, of Consob Regulation No. 11971 of May 14, 1999, as amended. Any offer,
sale or delivery of the units or distribution of copies of this prospectus or any other document relating to the units in Italy under (1) or (2) above must be (i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Decree No. 58 and Legislative Decree No. 385 of September 1, 1993, or the Banking Act; and (ii) in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy, as amended from time to time, pursuant to which the issue or the offer of securities in Italy may need to be preceded and followed by an appropriate notice to be filed with the Bank of Italy depending,
inter alia
, on the aggregate value of the securities issued or offered in Italy and their characteristics; and (iii) in compliance with any other applicable laws and regulations.
Germany
. The offering of the units is not a public offering in the Federal Republic of Germany. The units may only be acquired in accordance with the provisions of the Securities Sales Prospectus Act (Wertpapier-Verkaudfspropsektgestz), as amended, and any other applicable German law. No application has been made under German law to publicly market the units in or out of the Federal Republic of Germany. The units are not registered or authorized for distribution under the Securities Sales Prospectus Act and accordingly may not be, and are not being, offered or advertised publicly or by public promotion. Therefore, this prospectus is
strictly for private use and the offering is only being made to recipients to whom the document
115
TABLE OF CONTENTS
is personally addressed and does not constitute an offer or advertisement to the public. The units will only be available to persons who, by profession, trade or business, buy or sell shares for their own or a third party’s account.
France
. The units offered by this prospectus may not be offered or sold, directly or indirectly, to the public in France. This prospectus has not been or will not be submitted to the clearance procedure of the Autorité des Marchés Financiers, or the AMF, and may not be released or distributed to the public in France. Investors in France may only purchase the units offered by this prospectus for their own account and in accordance with articles L. 411-1, L. 441-2 and L. 412-1 of the Code Monétaire et Financier and decree no. 98-880 dated October 1, 1998, provided they are “qualified investors” within
the meaning of said decree. Each French investor must represent in writing that it is a qualified investor within the meaning of the aforesaid decree. Any resale, directly or indirectly, to the public of the shares offered by this prospectus may be effected only in compliance with the above mentioned regulations.
“Les actions offertes par ce document d’information ne peuvent pas être, directement ou indirectement, offertes ou vendues au public en France. Ce document d’information n’a pas été ou ne sera pas soumis au visa de l’Autorité des Marchés Financiers et ne peut être diffusé ou distribué au public en France. Les investisseurs en France ne peuvent acheter les actions offertes par ce document d’information que pour leur compte propre et conformément aux articles L. 411-1, L. 441-2 et L. 412-1 du Code Monétaire et Financier et du décret no. 98-880 du 1
Octobre 1998, sous réserve qu’ils soient des investisseurs qualifiés au sens du décret susvisé. Chaque investisseur doit déclarer par écrit qu’il est un investisseur qualifié au sens du décret susvisé. Toute revente, directe ou indirecte, des actions offertes par ce document d’information au public ne peut être effectuée que conformément à la réglementation susmentionnée.”
Switzerland
. This prospectus may only be used by those persons to whom it has been directly handed out by the offeror or its designated distributors in connection with the offer described therein. The units are only offered to those persons and/or entities directly solicited by the offeror or its designated distributors, and are not offered to the public in Switzerland. This prospectus constitutes neither a public offer in Switzerland nor an issue prospectus in accordance with the respective Swiss legislation, in particular but not limited to Article 652A Swiss Code Obligations. Accordingly, this prospectus may not be used in
connection with any other offer, whether private or public and shall in particular not be distributed to the public in Switzerland.
United Kingdom
. In the United Kingdom, the units offered by this prospectus are directed to and will only be available for purchase to a person who is an exempt person as referred to at paragraph (c) below and who warrants, represents and agrees that: (a) it has not offered or sold, will not offer or sell, any units offered by this prospectus to any person in the United Kingdom except in circumstances which do not constitute an offer to the public in the United Kingdom for the purposes of the section 85 of the Financial Services and Markets Act 2000 (as amended) (“FSMA”); and (b) it has complied and will comply with all
applicable provisions of FSMA and the regulations made thereunder in respect of anything done by it in relation to the units offered by this prospectus in, from or otherwise involving the United Kingdom; and (c) it is a person who falls within the exemptions to Section 21 of the FSMA as set out in The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“the Order”), being either an investment professional as described under Article 19 or any body corporate (which itself has or a group undertaking has a called up share capital or net assets of not less than £500,000 (if more than 20 members) or otherwise £5 million) or an unincorporated association or partnership (with net assets of not less than £5 million) or is a trustee of a high value trust or any person acting in the capacity of director, officer or employee of such entities as defined under Article 49(2)(a) to (d) of the Order, or a person to whom the invitation or inducement may
otherwise lawfully be communicated or cause to be communicated. The investment activity to which this document relates will only be available to and engaged in only with exempt persons referred to above. Persons who are not investment professionals and do not have professional experience in matters relating to investments or are not an exempt person as described above, should not review nor rely or act upon this document and should return this document immediately. It should be noted that this document is not a prospectus in the United Kingdom as defined in the Prospectus Regulations 2005 and has not been approved by the Financial Services Authority or any competent authority in the United Kingdom.
116
TABLE OF CONTENTS
Israel
. The units offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority (ISA). The units may not be offered or sold, directly or indirectly, to the public in Israel. The ISA has not issued permits, approvals or licenses in connection with the offering of the units or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of the units being offered. Any resale, directly or indirectly, to the public of the units offered by this prospectus is subject to restrictions on
transferability and must be effected only in compliance with the Israeli securities laws and regulations.
Sweden
. Neither this prospectus nor the units offered hereunder have been registered with or approved by the Swedish Financial Supervisory Authority under the Swedish Financial Instruments Trading Act (1991:980) (as amended), nor will such registration or approval be sought. Accordingly, this prospectus may not be made available nor may the units offered hereunder be marketed or offered for sale in Sweden other than in circumstances which are deemed not to be an offer to the public in Sweden under the Financial Instruments Trading Act. This prospectus may not be distributed to the public in Sweden and a Swedish recipient of the
prospectus may not in any way forward the prospectus to the public in Sweden.
Norway
. This prospectus has not been produced in accordance with the prospectus requirements laid down in the Norwegian Securities Trading Act 1997, as amended. This prospectus has not been approved or disapproved by, or registered with, either the Oslo Stock Exchange or the Norwegian Registry of Business Enterprises. This prospectus may not, either directly or indirectly be distributed to Norwegian potential investors.
Denmark
. This prospectus has not been prepared in the context of a public offering of securities in Denmark within the meaning of the Danish Securities Trading Act No. 171 of 17 March 2005, as amended from time to time, or any Executive Orders issued on the basis thereof and has not been and will not be filed with or approved by the Danish Financial Supervisory Authority or any other public authority in Denmark. The offering of units will only be made to persons pursuant to one or more of the exemptions set out in Executive Order No. 306 of 28 April 2005 on Prospectuses for Securities Admitted for Listing or Trade on a Regulated
Market and on the First Public Offer of Securities exceeding EUR 2,500,000 or Executive Order No. 307 of 28 April 2005 on Prospectuses for the First Public Offer of Certain Securities between EUR 100,000 and EUR 2,500,000, as applicable.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed upon by Conyers Dill & Pearman, Hong Kong. Loeb & Loeb, LLP, New York, New York, acted as counsel for us in connection with this offering. In connection with this offering, Ellenoff Grossman & Schole LLP, is acting as counsel to the underwriters.
EXPERTS
Our financial statements at December 31, 2007 appearing in this prospectus and in the registration statement have been included herein in reliance upon the report of Rothstein, Kass & Company, PC, independent registered public accounting firm, given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities we are offering by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information about us and our securities, you should refer to the registration statement and the exhibits and schedules filed with the registration statement. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are materially complete but may not include a description of all aspects of such contracts, agreements or other
documents, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document.
Upon consummation of this offering, we will be subject to the information requirements of the Exchange Act and will file annual, quarterly and current event reports, proxy statements and other information with the
117
TABLE OF CONTENTS
SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549.
You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.
118
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
INDEX TO FINANCIAL STATEMENTS
F-1
TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Hambrecht Asia Acquisition Corp.
We have audited the accompanying balance sheet of Hambrecht Asia Acquisition Corp. (a corporation in the development stage) (the “Company”) as of December 31, 2007 and the related statements of operations, stockholders’ equity and cash flows for the period from July 18, 2007 (date of inception) to December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hambrecht Asia Acquisition Corp. (a corporation in the development stage) as of December 31, 2007, and the results of its operations and its cash flows for the period from July 18, 2007 (date of inception) to December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.
/s/ Rothstein Kass & Company, P.C.
Roseland, New Jersey
January 30, 2008
F-2
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
BALANCE SHEET
December 31, 2007
|
|
|
|
ASSETS
|
|
|
|
|
|
Current asset,
cash
|
|
$
|
101,671
|
|
|
Other asset,
deferred offering costs
|
|
|
183,253
|
|
|
Total assets
|
|
$
|
284,924
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities, loan payable, stockholder
|
|
|
281,661
|
|
Commitments
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
Ordinary Shares—$0.001 par value; 50,000,000 shares authorized; 1,150,000 issued and
outstanding
|
|
|
1,150
|
|
|
Additional paid-in capital
|
|
|
23,850
|
|
|
Deficit accumulated during the development stage
|
|
|
(21,737
|
)
|
|
Total stockholders' equity
|
|
|
3,263
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
284,924
|
|
See accompanying notes to financial statements.
F-3
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
STATEMENT OF OPERATIONS
For the period from July 18, 2007 (date of inception) to December 31, 2007
|
|
|
|
|
Revenue
|
|
$
|
—
|
|
|
Formation and operating costs
|
|
$
|
(21,737
|
)
|
|
Net loss
|
|
|
(21,737
|
)
|
|
Weighted average number of ordinary shares outstanding, basic and diluted
|
|
|
1,150,000
|
|
|
Loss per ordinary share, basic and diluted
|
|
$
|
(0.02
|
)
|
See accompanying notes to financial statements.
F-4
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from July 18, 2007 (date of inception) to December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Shares
|
|
Additional Paid-In
Capital
|
|
Deficit
Accumulated During the Development Stage
|
|
Total
Stockholders’ Equity
|
|
|
|
Shares
|
|
Amount
|
Ordinary shares issued to the Company’s founders at approximately $0.0217
per share
|
|
|
1,150,000
|
|
|
$
|
1,150
|
|
|
$
|
23,850
|
|
|
$
|
—
|
|
|
$
|
25,000
|
|
|
Net loss for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21,737
|
)
|
|
|
(21,737
|
)
|
|
Balances, end of period
|
|
|
1,150,000
|
|
|
$
|
1,150
|
|
|
$
|
23,850
|
|
|
$
|
(21,737
|
)
|
|
$
|
3,263
|
|
See accompanying notes to financial statements.
F-5
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
STATEMENT OF CASH FLOWS
For the period from July 18, 2007 (date of inception) to December 31, 2007
|
|
|
|
Net cash used in operating activities:
|
|
|
|
|
|
Net loss
|
|
$
|
(21,737
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of ordinary shares to the initial shareholders (founders)
|
|
|
25,000
|
|
|
Proceeds from loan payable, shareholder
|
|
|
281,661
|
|
|
Payments of deferred offering costs
|
|
|
(183,253
|
)
|
|
Net cash provided by financing activities:
|
|
|
123,408
|
|
|
Net increase in cash
|
|
|
101,671
|
|
|
Cash — beginning of period
|
|
|
—
|
|
|
Cash — end of period
|
|
$
|
101,671
|
|
See accompanying notes to financial statements.
F-6
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
Hambrecht Asia Acquisition Corp. (a corporation in the development stage) (the “Company”) was incorporated in the Cayman Islands on July 18, 2007 with an authorized share capital of 50,000,000 ordinary shares (par value $0.001 per share). The Company’s founders contributed $25,000 to the formation of the Company and were issued 1,150,000 ordinary shares. The Company was formed to acquire, through a stock exchange, asset acquisition or other similar business combination, one or more operating businesses having its primary operations located in the People’s Republic of China (“Business Combination”).
The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting By Development Stage Enterprises”, and is subject to the risks associated with activities of development stage companies. The Company has selected December 31st as its fiscal year end.
At December 31, 2007, the Company has not commenced any operations. All activities and expenses incurred from July 18, 2007 through December 31, 2007 are related to the Company’s formation and the proposed public offering described below. The Company has neither engaged in any operations nor generated revenue to date.
Although substantially all of the net proceeds of the proposed offering of Units (as defined in Note 3 below) (the “Proposed Offering”), are intended to be generally applied toward consummating a business combination with (or acquisition of) one target business, there is no assurance that the Company will be able to successfully effect a Business Combination or complete the Proposed Offering. To the extent the Company completes the closing of the Proposed Offering, 97% of the gross proceeds, after deducting payment of certain amounts to the underwriter and other direct cost of the offering, will be held in a trust account until the earlier
of (i) the consummation of the first Business Combination or (ii) liquidation of the Company as described below. The proceeds held in the trust account excluding $960,000 to be paid to the underwriters upon consummation of a business combination and a portion of the interest earned may be used as consideration to pay the sellers of a target business with which the Company ultimately completes a business combination. Any amount not paid as consideration to the sellers of the target business may be used to finance operations of the target business or to effect other acquisitions, as determined by the Company’s board of directors at that time. The remaining proceeds of the Proposed Offering may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. The Company, after signing a definitive agreement for the acquisition of a target business, will submit such transaction for shareholder approval. The
business combination will proceed only if a majority of the ordinary shares voted by the public shareholders are voted in favor of the business combination and public shareholders owning less than 30% of the ordinary shares sold in this offering exercise their rights to redeem their shares for cash. These ordinary shares will be recorded at fair value and classified as temporary equity upon the completion of the Prosposed Offering, in accordance with EITF Topic D-98.
In the event that the Company does not consummate a Business Combination within 18 months from the date of the consummation of the Proposed Offering, or 24 months from the consummation of the Proposed Offering if certain extension criteria have been satisfied, or 36 months with the extension approved by the shareholders, the Company will be dissolved and the proceeds held in the Trust account, plus certain interest, less certain costs, each as described in this prospectus will be distributed to the Company’s public shareholders. In the event of such distribution, it is likely that the per share value of the residual assets remaining available
for distribution (including trust account assets) will be less than the initial public offering price per share in the Proposed Offering (assuming no value is attributed to the warrants contained in the Units to be offered in the Proposed Offering discussed in Note 3).
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. Management’s plans to address the financing needs of the Company are discussed in Note 3. There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful, or successfully completed within the required target business acquisition period.
F-7
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies
Foreign Currency Translation
The Company’s reporting currency is the United States dollar. Although the Company maintains a cash account with a bank in Hong Kong, denominated in US Dollars, its expenditures to date have been and are expected to continue to be denominated in United States dollars. Accordingly, the Company has designated its functional currency as the United States dollar.
In accordance with SFAS 52, “Foreign Currency Translation”, foreign currency balance sheets will be translated using the exchange rates as of the balance sheet date, and statements of operations will be translated at the transaction date or the average exchange rates for each period. The resulting translation adjustments to the balance sheet will be recorded in accumulated other comprehensive income(loss) within stockholders’ equity.
Foreign currency transaction gains and losses will be included in the statement of operations as they occur. For the periods presented, there were no local currency financial statements and, therefore, no such gains or losses and translation adjustments.
Basis of presentation:
The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting rules and regulations of the Securities and Exchange Commission (the “SEC”).
Development stage company:
The Company complies with the reporting requirements of SFAS No. 7, “Accounting and Reporting by Development Stage Enterprises.”
Loss per ordinary share:
Loss per ordinary share is based on the weighted average number of ordinary shares outstanding. The Company complies with SFAS No. 128, “Earnings Per Share,” which requires dual presentation of basic and diluted earnings per ordinary share on the face of the statement of operations. Basic loss per ordinary share and is computed by dividing net loss for the period by the weighted-average number of ordinary shares outstanding for the period. Diluted loss per ordinary shares reflects the potential dilution that could occur if convertible debentures, options and warrants were to be exercised or converted or otherwise resulted in the issuance of
common stock that then shared in the earnings of the entity.
Since the effects of outstanding warrants are anti-dilutive, they have been excluded from the computation of diluted loss per ordinary share and since the Company reported a net loss for the period July 18, 2007 (date of inception) to December 31, 2007, diluted loss per ordinary shares is the same as basic for the period.
Concentration of credit risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $100,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair value of financial instruments:
The fair values of the Company’s assets and liabilities that qualify as financial instruments under SFAS No. 107, “Disclosure About Fair Value of Financial Instruments,” approximate the carrying amounts represented in the accompanying balance sheet at December 31, 2007.
F-8
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
Note 2 — Summary of Significant Accounting Policies – (continued)
Use of estimates:
The preparation of financial statements in conformity with U.S GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Deferred offering costs:
The Company complies with the requirements of SEC Staff Accounting Bulletin (SAB) Topic 5A “Expenses of Offering”. Deferred offering costs consist principally of legal and accounting costs incurred through the balance sheet date that are related to the Proposed Offering and that will be charged to capital upon the completion of the Proposed Offering or charged to expense if the Proposed Offering is not completed.
Income taxes:
Under current Cayman Islands laws, the Company is not subject to income taxes, or capital gains, and no Cayman Islands withholding tax is imposed upon payments of dividends by the Company to its shareholders. In the future, the Company’s tax rate will be impacted by acquisitions of non-Cayman subsidiaries governed by the respective local income tax laws. Accordingly, no provision for income taxes has been made in the accompanying financial statements.
New Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years, which for the Company would be its fiscal year beginning January 1, 2008. The Company does not expect that the adoption of SFAS No. 157 will have a material impact on its financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This Statement permits entities to choose to measure many financial instruments at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company does not expect that the adoption of SFAS No. 159 will have a material impact on its financial statements.
Note 3 — Proposed Offering
The Proposed Offering calls for the Company to offer for public sale up to 4,000,000 units (“Units”) (up to 4,600,000 Units if the over-allotment option is exercised in full), at the Proposed Offering price of $8 per Unit. Each Unit consists of one ordinary share of the Company, $0.001 par value, and one redeemable warrant (“Warrant”). Each Warrant will entitle the holder to purchase from the Company one ordinary share at an exercise price of $6.00 commencing on the later of (a) one year from the effective date of the Proposed Offering or (b) the completion of a Business Combination with a target business, and expiring five years
from the date of the prospectus. The Warrant will be redeemable at a price of $0.01 per Warrant upon 30 days notice after the Warrants become exercisable, only in the event that the last sale price of the ordinary share is at least $11.50 per share for any 20 trading days within a 30 trading day period ending on three business days prior to the date on which notice redemption is given.
F-9
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
Note 3 — Proposed Offering – (continued)
Additionally, in the event that a registration statement is not effective at the time of exercise, the holder of a Warrant shall not be entitled to exercise such Warrant and in no event (whether in the case of a registration statement not being effective or otherwise) will the Company be required to net cash settle the warrant exercise. Consequently, the Warrants may expire unexercised and unredeemed. The holders of Warrants do not have the rights or privileges of holders of the Company’s ordinary shares or any voting rights until such holders exercise their respective Warrants and receive the Company’s ordinary shares. If the Company is
unable to deliver registered shares to the holder upon exercise of the Warrants during the exercise period, there will be no net cash settlement of the Warrants and the Warrants will expire worthless.
To the extent the Company completes the Proposed Offering, the Company has agreed to sell to the underwriters, for $100, an option to purchase up to a total of 280,000 units as compensation for their services (the “Underwriter Purchase Option”). The units issuable upon exercise of this option are identical to those offered in this Proposed Offering, including the redeemable warrants issuable pursuant to the option which have an exercise price of $6.00 (the same as the redeemable warrants included in the Units offered in the Proposed Offering.) However, upon exercise of the option, the price per unit to be paid will be $10.00 per Unit. The
option is exercisable commencing on the later of the consummation of a Business Combination and one year from the date of the prospectus and expires five years from the date of the prospectus. In lieu of the payment of the exercise price, the option may be converted into units on a net-share settlement or cashless exercise basis to the extent that the market value of the units at the time of conversion exceeds the exercise price of the option. The option may only be exercised or converted by the option holder and cannot be redeemed for cash by the Company or the option holder.
The Company has determined based upon a Black-Scholes option pricing formula, that the estimated fair value of the option on the date of sale would be approximately $3.36 per unit or an aggregate of approximately $941,000, assuming an expected life of five years, volatility of 51.51% and a risk-free interest rate of 3.38%. Given the parameters used in the computation of the fair value of the option change over time, the actual fair value of the option on the date of sale is expected to be different from the estimated fair value computed above.
The volatility calculation of 51.51% is based on the latest five year average volatility of 62 companies drawn from the Shanghai Stock Exchange Composite Index that had market capitalizations between $70 million and $150 million. Because the Company does not have a trading history, the Company estimated the potential volatility of its common stock price, which will depend on a number of factors which cannot be ascertained at this time. The Company used the annualized volatility of the daily historical volatilities for a period of time equal in length to the term of the option because the Company believes that the volatility of these companies is a
reasonable benchmark to use in estimating the expected volatility for the Company’s common stock post-Business Combination. Although an expected life of five years was taken into account for purposes of assigning a fair value to this option, if the Company does not consummate a Business Combination within the prescribed time period and liquidates, this option would become worthless.
Pursuant to Rule 2710(g)(1) of FINRA Conduct Rule, the option to purchase 280,000 units is deemed to be underwriting compensation and therefore upon exercise, the underlying shares and warrants are subject to a 180-day lock-up. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of the Proposed Offering.
Note 4 — Related Party Transactions
The Company has agreed to pay Hambrecht-Eu Capital, a company owned and managed by the Company’s Chairman of the board and Secretary, $7,500 per month for office space and general and administrative services including secretarial support commencing on November 15, 2007 and continuing (i) until the consummation by the Company of a business combination (as described in Note 1), (ii) 18 months from commencement of the Proposed Offering if the Company does not effect a Business Combination, (iii) 24
F-10
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
Note 4 — Related Party Transactions – (continued)
months from the consummation of the Proposed Offering if a letter of intent, agreement in principle or definitive agreement, has been executed within 18 months of commencement of the Proposed Offering and the Company has not effected a business combination, or (iv) 36 months from the consummation of the Proposed Offering if an extension has been approved by the Company’s shareholders under certain circumstances.
AEX Enterprises Limited, W.R. Hambrecht + Co., LLC and the Hambrecht 1980 Revocable Trust, companies controlled by Elizabeth R. Hambrecht, wife of Robert Eu, one of the Company’s founders and the Company’s Chairman and Secretary and William R. Hambrecht, Robert Eu’s father-in-law, Shea Ventures LLC, a company controlled by Edmund H. Shea Jr. and Marbella Capital Partners Ltd., a company controlled by John Wang, our Chief Executive Officer, have agreed to purchase an aggregate of 1,150,000 warrants at a price of $1.00 per warrant ($1,150,000 in the aggregate) in a private placement that will occur immediately prior to the initial public
offering. Elizabeth R. Hambrecht owns approximately 25% and William R. Hambrecht controls (through a trust of which he is trustee) approximately 38% of the voting shares of AEX Enterprises Limited. William Hambrecht is a controlling person of W.R. Hambrecht + Co., LLC and is the trustee of the Hambrecht 1980 Revocable Trust. The proceeds from the sale of the private placement warrants will be added to the proceeds from this offering to be held in the trust account pending the Company’s consummation of a business combination. If the Company does not complete a business combination that meets the criteria described in the proposed offering, then the $1,150,000 purchase price of the private placement warrants will become part of any liquidating distribution to the Company’s public shareholders following the Company’s liquidation and dissolution and the private placement warrants will expire worthless.
The private placement warrants will be non-redeemable so long as they are held by the original holders of the warrants, the founders or their permitted transferees. In addition, pursuant to the registration rights agreement, the holders of the private placement warrants and the underlying ordinary shares will be entitled to certain registration rights immediately after the consummation of the initial business combination and the warrants may be exercised on a cashless basis if held by the original holder, the founders or their permitted transferees. With those exceptions, the private placement warrants have terms and provisions that are otherwise
identical to those of the warrants being sold as part of the units in this offering.
The private placement warrants will be recorded at fair market value and classified as equity in accordance with EITF Issued No. 00-19.
AEX Enterprises Limited, W.R. Hambrecht + Co., LLC, the Hambrecht 1980 Revocable Trust, Shea Ventures LLC and Marbella Capital Partners Ltd. have agreed, subject to certain exceptions, not to transfer, assign or sell any of its private placement warrants until after the Company consummate a business combination. However, prior to the consummation of a business combination, the original holders of the warrants will be permitted to transfer their private placement warrants in certain limited circumstances, such as to the Company’s officers and directors, and other persons or entities associated with such persons, but the transferees receiving such
private placement warrants will be subject to the same sale restrictions imposed on such entity.
Robert Eu, one of the Company’s founders, has provided advances totaling $281,661 to pay the expenses of this offering for the SEC registration fee, FINRA registration fee, and accounting and legal fees and expenses. The note is payable on demand with interest at 4% per annum. The loan will be repaid out of the proceeds of this offering.
Note 5 — Commitments
The Company is committed to pay an underwriting discount of 4% of the public Unit offering price to the underwriters at the closing of the Proposed Offering, with an additional 3% fee of the deferred gross offering proceeds payable upon the Company’s consummation of a Business Combination.
F-11
TABLE OF CONTENTS
HAMBRECHT ASIA ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
Note 5 — Commitments – (continued)
The Company expects to grant the underwriters a 45-day option to purchase up to 600,000 additional Units to cover the over-allotment. The over-allotment option will be used only to cover a net short position resulting from the initial distribution.
F-12
TABLE OF CONTENTS
Until
, 2008, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
No dealer, salesperson or any other person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful.
TABLE OF CONTENTS
TABLE OF CONTENTS
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than the underwriting discount, payable by us in connection with the offering of the securities being registered. All amounts are estimates except the Securities and Exchange Commission registration fee and the Financial Industry Regulatory Authority filing fee.
|
|
|
|
|
SEC registration fee
|
|
$
|
2,115
|
|
|
FINRA filing fee
|
|
|
14,300
|
|
|
Accounting fees and expenses
|
|
|
30,000
|
|
|
Legal fees and expenses
|
|
|
300,000
|
|
|
Printing and engraving expenses
|
|
|
50,000
|
|
|
Miscellaneous
|
|
|
22,000
|
|
|
Total
|
|
$
|
418,415
|
|
Item 14. Indemnification of Directors and Officers.
Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may beheld by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articles of association provide for indemnification of our officers and directors for any liability incurred in their capacities as such, except through their own willful negligence or default.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is theretofore unenforceable.
Item 15. Recent Sales of Unregistered Securities.
On July 18, 2007, we sold 1,150,000 ordinary shares (150,000 of which we will redeem if the underwriters do not exercise their over-allotment option) to John Wang, Robert J. Eu and Stephen N. Cannon for an aggregate purchase price of $25,000 in a private placement. The shares were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(2) as they were sold to accredited investors. No underwriting discounts or commissions were paid with respect to such sales. Mr. Cannon subsequently transferred all of the shares he purchased to the Cannon Family Irrevocable Trust, of which Mr. Cannon is the sole
trustee.
AEX Enterprises Limited, W.R. Hambrecht + Co., LLC and the Hambrecht 1980 Revocable Trust, companies controlled by Elizabeth R. Hambrecht, wife of Robert Eu, one of our founders and our Chairman and Secretary, and William R. Hambrecht, Mr. Eu’s father-in-law, Shea Ventures LLC, a company controlled by Edmund H. Shea Jr. and Marbella Capital Partners Ltd., a company controlled by John Wang, our Chief Executive Officer, has agreed to purchase 1,150,000 warrants immediately prior to the consummation of our initial public offering in a private placement at an aggregate purchase price of $1,150,000. Elizabeth R. Hambrecht owns approximately 25% and
William R. Hambrecht controls (through a trust of which he is trustee) approximately 38% of the voting shares of AEX Enterprises Limited. William Hambrecht is a controlling person of W.R. Hambrecht + Co., LLC and is the trustee of the Hambrecht 1980 Revocable Trust. These warrants will be issued in reliance exemption from registration contained in Section 4(2) as they will be sold to a company owned by sophisticated, wealthy individuals not formed for the specific purpose of investing in our securities. No underwriting discounts or commissions will be payable with respect to the insider warrants sold in the private placement.
II-1
TABLE OF CONTENTS
Item 16. Exhibits and Financial Statement Schedules.
The following exhibits are filed as part of this Registration Statement:
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
1.1
|
|
Form of Underwriting Agreement
|
|
3.1
|
|
Memorandum of Association**
|
|
3.2
|
|
Articles of Association**
|
|
3.3
|
|
Form of Amended and Restated Articles of Association
|
|
3.4
|
|
Form of Amended and Restated Memorandum of Association
|
|
4.1
|
|
Specimen Unit Certificate
|
|
4.2
|
|
Specimen Ordinary Share Certificate
|
|
4.3
|
|
Specimen Public Warrant Certificate**
|
|
4.4
|
|
Specimen Private Warrant Certificate**
|
|
4.5
|
|
Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant
|
|
4.6
|
|
Form of Unit Purchase Option
|
|
5.1
|
|
Opinion of Conyers Dill & Pearman, Cayman Islands counsel to the Registrant
|
|
5.2
|
|
Opinion of Loeb & Loeb LLP
|
|
10.1
|
|
Form of Letter Agreement by John Wang
|
|
10.2
|
|
Form of Letter Agreement by Robert J. Eu
|
|
10.3
|
|
Form of Letter Agreement by Stephen N. Cannon
|
|
10.4
|
|
Form of Letter Agreement by Lee S. Ting
|
|
10.5
|
|
Form of Letter Agreement by AEX Enterprises Limited
|
|
10.6
|
|
Form of Letter Agreement by Feng Zhang
|
|
10.7
|
|
Form of Letter Agreement by W.R. Hambrecht + Co., LLC
|
|
10.8
|
|
Form of Letter Agreement by the Hambrecht 1980 Revocable Trust
|
|
10.9
|
|
Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant
|
|
10.10
|
|
Form of Securities Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company, the founding shareholders and the founders
|
|
10.11
|
|
Form of Services Agreement between the Registrant and Hambrecht Eu Capital Management LLC**
|
|
10.12
|
|
Form of Registration Rights Agreement among the Registrant, the founding shareholders and the founders
|
|
10.13
|
|
Revolving Credit Agreement between the Registrant and Robert Eu**
|
|
10.14
|
|
Promissory Note between Registrant and Robert Eu**
|
|
10.15
|
|
Form of Warrant Purchase Agreement between the Registrant and AEX Enterprises Limited, W.R. Hambrecht + Co., LLC, the Hambrecht 1980 Revocable Trust, Shea Partners LLC and Marbella Capital Partners Ltd.
|
|
10.16
|
|
Form of Right of First Refusal Agreement between the Registrant, Marbella Capital Partners and AEX Enterprises Limited
|
|
10.17
|
|
Amendment to Revolving Credit Agreement between Registrant and Robert Eu**
|
|
10.18
|
|
Form of Letter Agreement by Shea Ventures LLC
|
|
10.19
|
|
Form of Letter Agreement by Marbella Capital Partners Ltd.
|
|
23.1
|
|
Consent of Rothstein, Kass & Company, PC
|
|
23.2
|
|
Consent of Conyers Dill & Pearman, Cayman Islands counsel to the Registrant (included in Exhibit 5.1)
|
|
23.3
|
|
Consent of Loeb & Loeb LLP counsel to the Registrant (included in Exhibit 5.2)
|
|
24
|
|
Power of Attorney**
|
|
|
*
|
To be filed by amendment
|
II-2
TABLE OF CONTENTS
Item 17. Undertakings.
|
|
(a)
|
The undersigned registrant hereby undertakes:
|
|
|
(1)
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
|
i.
|
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
|
|
|
ii.
|
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
|
|
|
iii.
|
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
|
|
(2)
|
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
|
(3)
|
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
|
|
(4)
|
That for the purpose of determining any liability under the Securities Act of 1933 in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
|
i.
|
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
|
|
ii.
|
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
|
|
iii.
|
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
|
|
iv.
|
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser
|
|
|
(b)
|
The undersigned hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
|
|
|
(c)
|
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of
|
II-3
TABLE OF CONTENTS
|
|
|
the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
|
|
|
(d)
|
The undersigned registrant hereby undertakes that:
|
|
|
(1)
|
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
|
|
|
(2)
|
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
II-4
TABLE OF CONTENTS
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Hong Kong on January 31, 2008.
HAMBRECHT ASIA ACQUISITION CORP
.
|
|
By:
|
/s/ John Wang*
John Wang
Chief Executive Officer
|
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities held on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
/s/ Robert Eu*
Robert Eu
|
|
Chairman of the Board,
Secretary and Director
|
|
January 31, 2008
|
/s/ John Wang*
John Wang
|
|
Chief Executive Officer,
President and Director
(principal executive officer)
|
|
January 31, 2008
|
/s/ Stephen Cannon
Stephen Cannon
|
|
Chief Financial Officer and Director
(principal financial and accounting officer)
|
|
January 31, 2008
|
/s/ Lee S. Ting*
Lee S. Ting
|
|
Director
|
|
January 31, 2008
|
*By: /s/ Stephen Cannon
Stephen Cannon, attorney in fact
|
4,000,000
Units
HAMBRECHT
ASIA ACQUISITION CORP.
UNDERWRITING
AGREEMENT
New
York,
New York
________________,
2008
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
As
Representative of the Underwriters
named
on
Schedule
A
hereto
Ladies
and Gentlemen:
Hambrecht
Asia Acquisition Corp., a Cayman Islands corporation (“
Company
”),
hereby confirms its agreement with Broadband Capital Management LLC
(“
Broadband
”
or
the
“
Representative
”)
and
with the other underwriters named on
Schedule
A
hereto
for which Broadband is acting as representative (the Representative and the
other underwriters being collectively referred to herein as the “
Underwriters
”
or,
individually, an “
Underwriter
”)
as
follows:
1.
Purchase
and Sale of Securities
.
1.1.1.
Purchase
of Firm Units
.
On the
basis of the representations and warranties herein contained, but subject to
the
terms and conditions herein set forth, the Company agrees to issue and sell
to
the several Underwriters, severally and not jointly, an aggregate of 4,000,000
units (the “
Firm
Units
”)
of the
Company’s securities at a purchase price (net of discounts and commissions,
$.0.24 of which shall be deposited into the Trust Account (as defined below))
of
$7.44 per Firm Unit. The Underwriters, severally and not jointly, agree to
purchase from the Company the number of Firm Units set forth opposite their
respective names on
Schedule
A
attached
hereto and made a part hereof at a purchase price (net of discounts and
commissions ($0.24 of which shall be deposited into the Trust Account pursuant
to Section 1.5)) of $7.44 per Firm Unit. The Firm Units are to be offered
initially to the public (the “
Offering
”)
at the
offering price of $8.00 per Firm Unit. Each Firm Unit consists of one share
of
the Company’s ordinary shares, par value $.001 per share (the “
Ordinary
Shares
”),
and
one warrant to purchase one Ordinary Share (the “
Warrant(s)
”).
The
Ordinary Shares and the Warrants included in the Firm Units will not be
separately transferable until the 45
th
day
after the date of the Prospectus (as defined herein), unless Broadband
determines that an earlier date is acceptable, subject to the Company’s having
filed the Current Report on Form 8-K and having issued a press release
announcing when such separate trading will begin. In no event will the Ordinary
Shares and Warrants be traded separately until the Company has filed a Current
Report on Form 8-K with the Securities and Exchange Commission (the
“
Commission
”)
containing an audited balance sheet reflecting its receipt of the gross proceeds
of the Offering. The Company will file the Current Report on Form 8-K promptly
upon the consummation of the Offering, which is anticipated to take place within
four business days from the date of the Prospectus. If the Over-Allotment Option
(as herein defined) is exercised following the initial filing of such Current
Report on Form 8-K, a second or amended Current Report on Form 8-K will be
filed
to provide updated financial information to reflect the exercise of the
Over-Allotment Option. Each Warrant entitles its holder to purchase one Ordinary
Share for $6.00 per share during the period commencing on the later of: (i)
the
consummation by the Company of a Business Combination (as defined below) or
(ii)
one year from the effective date (the “
Effective
Date
”)
of the
Registration Statement (as defined below) and terminating on the five-year
anniversary of the Effective Date. As used herein, the term “
Business
Combination
”
shall
mean any acquisition of, through a merger, capital stock exchange, asset
acquisition or other similar business combination, one or more businesses having
its primary operations in the Peoples Republic of China. The Company has the
right to redeem the Warrants upon not less than thirty (30) days’ written notice
at a price of $0.01 per Warrant at any time; provided, however, that the last
sale price of the Ordinary Shares has been at least $11.50 for any twenty (20)
trading days within a thirty (30) trading day period ending on the third
Business Day prior to the day on which notice is given. As used herein, the
term
“
Business
Day
”
shall
mean any day other than a Saturday, Sunday or any day on which national banks
in
New York, New York are not open for business.
Broadband
Capital Management LLC
1.1.2.
Payment
and Delivery
.
Delivery and payment for the Firm Units shall be made at 10:00 A.M., New York
time, on the third Business Day (as elsewhere defined) following the Effective
Date (or the fourth Business Day following the Effective Date, if the
Registration Statement is declared effective after 4:30 p.m.) or at such earlier
time as shall be agreed upon by the Representative and the Company at the
offices of the Representative or at such other place as shall be agreed upon
by
the Representative and the Company. The closing of the Offering is referred
to
herein as the “
Closing
”
and
the
hour and date of delivery and payment for the Firm Units is referred to herein
as the “
Closing
Date
.”
Payment for the Firm Units shall be made on the Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds.
$30,080,000 ($34,592,000 if the Over-allotment Option (as defined in Section
1.2) is exercised in full) of the proceeds received by the Company for the
Firm
Units and the Private Placement (as defined in Section 1.4) shall be deposited
into the trust account (the “
Trust
Account
”)
established by the Company for the benefit of the public shareholders and the
Underwriters, as described in the Registration Statement and pursuant to the
terms of an Investment Management Trust Agreement (the “
Trust
Agreement
”),
which
amount includes up to $960,000 ($0.24 per Firm Unit; $1,104,000 if the
Over-allotment Option is exercised in full, which represents $0.24 per Option
Unit (as defined below)), payable to the Underwriters as contingent compensation
upon consummation of a Business Combination (subject to Section 1.5 hereof).
The
remaining proceeds (less commissions, expense allowance and actual expense
payments or other fees payable pursuant to this Agreement), if any, shall be
paid to the order of the Company upon delivery to the Representative of
certificates (in form and substance satisfactory to the Underwriters)
representing the Firm Units (or through the facilities of the Depository Trust
Company (the “
DTC
”))
for
the account of the Underwriters. The Firm Units shall be registered in such
name
or names and in such authorized denominations as the Representative may request
in writing at least two Business Days prior to the Closing Date. The Company
will permit the Representative to examine and package the Firm Units for
delivery, at least one full Business Day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Units except upon tender
of
payment by the Representative for all the Firm Units.
Broadband
Capital Management LLC
1.2.
Over-Allotment
Option
.
1.2.1.
Option
Units
.
For the
purposes of covering any over-allotments in connection with the distribution
and
sale of the Firm Units, the Underwriters are hereby granted, severally and
not
jointly, an option to purchase up to an additional 600,000
units
from the Company (the “
Over-allotment
Option
”).
Such
additional 600,000 units shall be identical in all respects to the Firm Units
and are hereinafter referred to as “
Option
Units
.”
The
Firm Units and the Option Units are hereinafter collectively referred to as
the
“
Units
”
and
the
Units, the Ordinary Shares and the Warrants included in the Units and the
Ordinary Shares issuable upon exercise of the Warrants are hereinafter referred
to collectively as the “
Public
Securities
.”
The
purchase price to be paid for each Option Unit (net of discounts and
commissions) will be $7.44 per Option Unit (with $0.24 of the underwriting
discount being deposited in the Trust Account pursuant to Section 1.5). The
Option Units are to be offered initially to the public at the offering price
of
$8.00 per Option Unit.
1.2.2.
Exercise
of Option
.
The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised
by the Representative as to all (at any time) or any part (from time to time)
of
the Option Units within 45 days after the Effective Date. The Underwriters
will
not be under any obligation to purchase any Option Units prior to the exercise
of the Over-allotment Option. The Over-allotment Option granted hereby may
be
exercised by the giving of oral notice to the Company from the Representative,
which must be confirmed in writing by overnight mail or facsimile transmission
setting forth the number of Option Units to be purchased and the date and time
for delivery of, and payment for, the Option Units, which will not be later
than
five (5)
Business
Days after the date of the notice or such other time as shall be agreed upon
by
the Company and the Representative, at the offices of the Representative or
at
such other place and in such other manner as shall be agreed upon by the Company
and the Representative. If such delivery and payment for the Option Units does
not occur on the Closing Date, the date and time of the closing for such Option
Units will be as set forth in the notice (hereinafter the “
Option
Closing Date
”).
Upon
exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set forth
herein, the Underwriters will become obligated to purchase, the number of Option
Units specified in such notice.
1.2.3.
Payment
and Delivery
.
Payment
for the Option Units shall be made on the Option Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, by
deposit of the sum of $7.44 per Option Unit (with $0.24 of the underwriting
discount being deposited into the Trust Account as set forth in Section 1.5)
in
the Trust Account pursuant to the Trust Agreement upon delivery to the
Representative of certificates (in form and substance satisfactory to the
Underwriters) representing the Option Units (or through the facilities of DTC)
for the account of the Underwriters. The certificates representing the Option
Units to be delivered will be in such denominations and registered in such
names
as the Representative requests not less than two Business Days prior to the
Closing Date or the Option Closing Date, as the case may be, and will be made
available to the Representative for inspection, checking and packaging at the
aforesaid office of the Company’s transfer agent or correspondent not less than
one full Business Day prior to such Closing Date or Option Closing
Date.
Broadband
Capital Management LLC
1.3.
Representative’s
Purchase Option
.
1.3.1.
Purchase
Option
.
The
Company hereby agrees to issue and sell to the Representative (and/or their
designees) on the Closing Date an option (“
Representative’s
Purchase Option
”)
to
purchase up to an aggregate of 280,000 units (the “
Representative’s
Units
”)
for an
aggregate purchase price of $100.00. The Representative’s Purchase Option shall
be exercisable, in whole or in part, commencing on the later of the consummation
of a Business Combination or six months from the Effective Date and expiring
on
the five-year anniversary of the Effective Date at an initial exercise price
per
Representative’s Unit of $10.00, which is equal to one hundred and twenty-five
percent (125%) of the initial public offering price of a Unit. The
Representative’s Purchase Option, the Representative’s Units, the Ordinary
Shares (the “
Representative’s
Shares
”)
and
the Warrants (the “
Representative’s
Warrants
”)
included in the Representative’s Units and the Ordinary Shares issuable upon
exercise of the Representative’s Warrants are hereinafter referred to
collectively as the “
Representative’s
Securities
.”
The
Public Securities and the Representative’s Securities are hereinafter referred
to collectively as the “
Securities
.”
1.3.2.
Delivery
and Payment
.
Delivery and payment for the Representative’s Purchase Option shall be made on
the Closing Date. The Company shall deliver to the Representative, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Representative may
request.
1.4
Private
Placement
.
Prior
to the Effective Date, AEX Enterprises Limited, WR Hambrecht + Co., LLC, The
Hambrecht 1980 Revocable Trust, Shea Ventures LLC and Marbella Capital Partners
Ltd. (collectively, the
“Placement
Investor
”)
purchased from the Company pursuant to the Subscription Agreement (as defined
in
Section 2.25.2 hereof), 1,150,000 warrants identical to the Warrants (the
“
Placement
Warrants
”)
at a
purchase price of $1.00 per Placement Warrant in a private placement (the
“
Private
Placement
”)
intended to be exempt from registration under the Act under Section 4(2) of
the
Securities Act of 1933, as amended (the “
Act
”).
The
Placement Warrants and Ordinary Shares issuable upon exercise of the Placement
Warrants are hereinafter referred to collectively as the “
Placement
Securities
.”
No
underwriting discounts, commissions or placement fees have been or will be
payable in connection with the Private Placement. None of the Placement
Securities may be sold, assigned or transferred by the Placement Investor until
after consummation of a Business Combination. The Placement Investor shall
have
no right to any liquidation distributions with respect to any portion of the
Placement Securities in the event the Company fails to consummate a Business
Combination. The Placement Investor shall not have redemption rights with
respect to the Placement Securities.
Broadband
Capital Management LLC
1.5.
Contingent
Portion of Underwriters’ Discount
.
The
Representative, on behalf of itself and the other Underwriters, agrees that
3%
of the gross proceeds from the sale of the Firm Units ($960,000) and
the
sale of any Option Units (an additional $144,000 if the Over-allotment Option
is
exercised in full) (collectively, such amounts are the “
Contingent
Discount
”)
will be deposited in and held in the Trust Account and payable to the
Representative, in respect of any IPO Shares (defined in Section 7.6 hereof)
not
redeemed pursuant to Section 7.6 hereof upon the consummation of a Business
Combination. The Representative, on behalf of itself and the other Underwriters,
agrees that the several Underwriters shall forfeit any rights or claims to
the
Contingent Discount in respect of any IPO Shares that are redeemed pursuant
to
Section 7.6 hereof. In addition, in the event that the Company is unable to
consummate a Business Combination and Continental Stock Transfer & Trust
Company (the “Trustee”), the trustee of the Trust Account, commences liquidation
of the Trust Account as provided in the Trust Agreement, the Representative,
on
behalf of itself and the other Underwriters, agrees that (i) the several
Underwriters shall forfeit any rights or claims to the Contingent Discount;
and
(ii) the Contingent Discount, together with the all other amounts on deposit
in
the Trust Account, shall be distributed on a pro-rata basis among the holders
of
the IPO Shares.
1.6.
Working
Capital; Interest on Trust
.
1.6.1.
Working
Capital
. Upon consummation of the Offering, $411,585 (the
“Working
Capital
”) of the net proceeds of the Private Placement will be released
to the Company to fund the working capital requirements of the Company.
1.6.2.
Interest
Income
.
Prior to the Company’s consummation of a business combination or the Company’s
liquidation, interest earned on the Trust Account may be released (i) to the
Company pay any taxes incurred by the Company, (ii) to redeeming shareholders
voting against the extended period, as more fully described in the prospectus,
and (iii) to the Company, from time to time, to fund its working capital and
general corporate requirements in an amount not to exceed $1,350,000.
2.
Representations
and Warranties of the Company
.
The Company represents and warrants to the Underwriters as follows:
2.1.
Filing
of Registration Statement
.
Broadband
Capital Management LLC
2.1.1.
Pursuant
to the Act
.
The Company has filed with the Commission a registration statement and an
amendment or amendments thereto, on Form S-1 (File No. 333-146147), including
any related preliminary prospectus (the “
Preliminary
Prospectus
”,
including any prospectus that is included in the Registration Statement
immediately prior to the effectiveness of the Registration Statement), for
the
registration of the Public Securities and the Representative’s Securities under
the Act, which registration statement and amendment or amendments have been
prepared by the Company in conformity with the requirements of the Act, and
the
rules and regulations (the “
Regulations
”)
of the Commission under the Act. The conditions for use of Form S-1 to register
the Offering under the Act, as set forth in the General Instructions to such
Form, have been satisfied. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time
the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part thereof as
of
such time pursuant to Rule 430A of the Regulations), is hereinafter called
the
“
Registration
Statement
,”
and the form of the final prospectus dated the Effective Date included in the
Registration Statement (or, if applicable, the form of final prospectus
containing information permitted to be omitted at the time of effectiveness
by
Rule 430A of the Regulations filed with the Commission pursuant to Rule 424
of
the Regulations), is hereinafter called the “
Prospectus
.”
For purposes of this Agreement, “
Time
of Sale
”,
as used in the Act, means 5:00 p.m., New York City time, on the date of this
Agreement. Prior to the Time of Sale, the Company prepared preliminary
prospectuses, dated January 31, 2008 for distribution by the Underwriters
(together the “
Sale
Preliminary Prospectus
”).
If the Company has filed, or is required pursuant to the terms hereof to file,
a
registration statement pursuant to Rule 462(b) under the Act registering
additional Securities of any type (a “
Rule
462(b) Registration Statement
”),
then, unless otherwise specified, any reference herein to the term “
Registration
Statement
”
shall be deemed to include such Rule 462(b) Registration Statement. Other than
a
Rule 462(b) Registration Statement, which, if filed, becomes effective upon
filing, no other document with respect to the Registration Statement has
heretofore been filed with the Commission. All of the Public Securities have
been registered under the Act pursuant to the Registration Statement or, if
any
Rule 462(b) Registration Statement is filed, will be duly registered under
the
Securities Act with the filing of such Rule 462(b) Registration Statement.
The
Registration Statement has been declared effective by the Commission on the
date
hereof.
If, subsequent to the date of this Agreement, the Company or the Representative
has determined that at the Time of Sale the Sale Preliminary Prospectus included
an untrue statement of a material fact or omitted a statement of material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading and have agreed to provide an
opportunity to purchasers of the Firm Units to terminate their old purchase
contracts and enter into new purchase contracts, then the Sale Preliminary
Prospectus will be deemed to include any additional information available to
purchasers at the time of entry into the first such new purchase
contract.
2.1.2.
Pursuant
to the Exchange Act
.
The Company has filed with the Commission a Form 8-A (File Number
)
providing for the registration under the Securities Exchange Act of 1934, as
amended (the “
Exchange
Act
”),
of the Units, the Ordinary Shares and the Warrants. The registration of the
Units, Ordinary Shares and Warrants under the Exchange Act has been declared
effective by the Commission on the date hereof.
2.2.
No
Stop Orders, etc.
Neither the Commission nor, to the Company’s knowledge, any foreign or state
regulatory authority has issued any order or threatened to issue any order
preventing or suspending the use of any Sale Preliminary Prospectus or
Prospectus or has instituted or, to the best of the Company’s knowledge,
threatened to institute any proceedings with respect to such an
order.
Broadband
Capital Management LLC
2.3.
Disclosures
in Registration Statement
.
2.3.1.
10b-5
Representation
.
At the time of effectiveness of the Registration Statement (or at the time
any
post-effective amendment to the Registration Statement) and at all times
subsequent thereto up to the Closing Date and the Option Closing Date, if any,
the Registration Statement, the Sale Preliminary Prospectus and the Prospectus
contained or will contain all material statements that are required to be stated
therein in accordance with the Act and the Regulations, and did or will, in
all
material respects, conform to the requirements of the Act and the Regulations.
Neither the Registration Statement, the Sale Preliminary Prospectus nor any
Preliminary Prospectus or the Prospectus contained therein, nor any amendment
or
supplement thereto, on their respective dates, nor the Sale Preliminary
Prospectus as of the Time of Sale did or will contain any untrue statement
of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein (in light of the circumstances
under
which they were made), not misleading. When any Preliminary Prospectus or Sale
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or
any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus or Sale Preliminary Prospectus and any amendments
thereof and supplements thereto complied or will have been corrected in the
Sale
Preliminary Prospectus and the Prospectus to comply in all material respects
with the applicable provisions of the Act and the Regulations and did not and
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The representation and warranty made in this Section 2.3.1
does
not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to
the
Underwriters by the Representative expressly for use in the Registration
Statement, the Sale Preliminary Prospectus or Prospectus or any amendment
thereof or supplement thereto, which information, it is agreed, shall consist
solely of the names of the several Underwriters and the subsections captioned
“
Pricing
of Securities” and
“
Foreign
Regulatory Restrictions on Purchase of the Units”
contained
in the section of the Prospectus entitled “Underwriting.”
2.3.2.
Disclosure
of Agreements
.
The agreements and documents described in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus conform to the descriptions thereof
contained therein and there are no agreements or other documents required to
be
described in the Registration Statement, the Sale Preliminary Prospectus or
the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and (i)
that
is referred to in the Registration Statement or attached as an exhibit thereto,
or (ii) is material to the Company’s business, has been duly and validly
executed by the Company, is in full force and effect in all material respects
and is enforceable against the Company and, to the Company’s knowledge, the
other parties thereto, in accordance with its terms, except (x) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the foreign,
federal and state securities laws, and (z) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and none of such agreements or instruments
has been assigned by the Company, and neither the Company nor, to the Company’s
knowledge, any other party is in breach or default thereunder and, to the
Company’s knowledge, no event has occurred that, with the lapse of time or the
giving of notice, or both, would constitute a breach or default thereunder.
To
the Company’s knowledge, performance by the Company of the material provisions
of such agreements or instruments will not result in a violation of any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company
or
any of its assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
Broadband
Capital Management LLC
2.3.3.
Prior
Securities Transactions
.
No securities of the Company have been sold by the Company or by or on behalf
of, or for the benefit of, any person or persons controlling, controlled by,
or
under common control with the Company since the date of the Company’s formation,
except as disclosed in the Registration Statement.
2.3.4.
Regulations
.
The disclosures in the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus concerning the effects of foreign, federal, state and local
regulation on the Company’s business as currently contemplated are correct in
all material respects and do not omit to state a material fact necessary to
make
the statements therein, in light of the circumstances in which they were made,
not misleading.
2.4.
Changes
After Dates in Registration Statement
.
2.4.1.
No
Material Adverse Change
.
Since the respective dates as of which information is given in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, except as
otherwise specifically stated therein: (i) there has been no material adverse
change in the condition, financial or otherwise, or business prospects of the
Company; (ii) there have been no material transactions entered into by the
Company, other than as contemplated pursuant to this Agreement; (iii) no member
of the Company’s board of directors or management has resigned from any position
with the Company and (iv) no event or occurrence has taken place which
materially impairs, or would likely materially impair, with the passage of
time,
the ability of the members of the Company’s board of directors or management to
act in their capacities with the Company as described in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus.
2.4.2.
Recent
Securities Transactions, etc.
Subsequent
to the respective dates as of which information is given in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus and except as
may
otherwise be indicated or contemplated herein or therein, the Company has not:
(i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any dividend or made
any other distribution on or in respect to its capital stock.
Broadband
Capital Management LLC
2.5.
Independent
Accountants
.
Rothstein Kass & Co., PC (“Rothstein”), whose report is filed with the
Commission as part of the Registration Statement and included in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
are
independent registered public accountants as required by the Act, the
Regulations and the Public Company Accounting Oversight Board (including the
rules and regulations promulgated by such entity, the “
PCAOB
”).
To the Company’s knowledge, Rothstein is duly registered and in good standing
with the PCAOB. Rothstein has not, during the periods covered by the financial
statements included in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus, provided to the Company any non-audit services,
as such term is used in Section 10A(g) of the Exchange Act.
2.6.
Financial
Statements; Statistical Data
.
2.6.1.
Financial
Statements
.
The financial statements, including the notes thereto and supporting schedules
included in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus, fairly present the financial position and the results of operations
of the Company at the dates and for the periods to which they apply; and such
financial statements have been prepared in conformity with the Regulations,
consistently applied throughout the periods involved; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein in conformity with the Regulations. No other
financial statements or supporting schedules are required to be included or
incorporated by reference in the Registration Statement, the Sale Preliminary
Prospectus or the Prospectus. The Registration Statement, the Sale Preliminary
Prospectus and the Prospectus disclose all material off-balance sheet
transactions, arrangements, obligations (including contingent obligations),
and
other relationships of the Company with unconsolidated entities or other persons
that may have a material current or future effect on the Company’s financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses. There are no pro forma or as adjusted financial statements which
are required to be included
in
the Registration Statement, the Sale Preliminary Prospectus or the Prospectus
in
accordance with
Regulation
S-X of the Regulations which have not been included as so required.
2.6.2.
Statistical
Data
.
The statistical, industry-related and market-related data included in the
Registration Statement, the Sale Preliminary Prospectus and/or the Prospectus
are based on or derived from sources which the Company reasonably and in good
faith believes are reliable and accurate, and such data agree with the sources
from which they are derived.
2.7.
Authorized
Capital; Options, etc.
The Company had at the date or dates indicated in each of the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, as the case
may
be, duly authorized, issued and outstanding capitalization as set forth in
the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus.
Based on the assumptions stated in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus, the Company will have on the Closing
Date the adjusted stock capitalization set forth therein. Except as set forth
in, or contemplated by, the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus, on the Effective Date and on the Closing Date
and
the Option Closing Date, if any, there will be no options, warrants, or other
rights to purchase or otherwise acquire any authorized, but unissued Ordinary
Shares or any security convertible into Ordinary Shares, or any contracts or
commitments to issue or sell Ordinary Shares or any such options, warrants,
rights or convertible securities.
Broadband
Capital Management LLC
2.8.
Valid
Issuance of Securities, etc.
2.8.1.
Outstanding
Securities
.
All issued and outstanding Ordinary Shares of the Company have been duly
authorized and validly issued and are fully paid and non-assessable; the holders
thereof have no rights of rescission with respect thereto, and are not subject
to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders
of
any security of the Company or similar contractual rights granted by the
Company. The outstanding Ordinary Shares conform to the descriptions thereof
contained in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus. All offers and sales of the outstanding Ordinary Shares of the
Company were at all relevant times either registered under the Act and the
applicable state securities or Blue Sky laws or, based in part on the
representations and warranties of the purchasers of such Ordinary Shares, exempt
from such registration requirements.
2.8.2.
Securities
Sold
.
The Securities have been duly authorized and reserved for issuance and when
issued and paid for, will be validly issued, fully paid and non-assessable;
the
holders thereof are not and will not be subject to personal liability by reason
of being such holders; the Securities are not and will not be subject to the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action required
to
be taken for the authorization, issuance and sale of the Securities has been
duly and validly taken. The Securities conform in all material respects to
the
descriptions thereof contained in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus, as the case may be. When issued,
the
Representative’s Purchase Option, the Representative’s Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative’s Purchase Option,
Representative’s Warrants and Warrants are enforceable against the Company in
accordance with their respective terms, except: (i) as such enforceability
may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of any indemnification or
contribution provision may be limited under foreign, federal and state
securities laws; and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The Ordinary Shares issuable upon exercise of the
Representative’s Purchase Option, the Representative’s Warrants and the Warrants
have been reserved for issuance upon the exercise of the Warrant upon payment
of
the consideration therefore, and when issued in accordance with the terms
thereof, will be duly and validly authorized, validly issued, fully paid and
non-assessable; the holders thereof are not and will not be subject to personal
liability by reason of being such holders.
Broadband
Capital Management LLC
2.8.3.
Placement
Warrants
.
The Placement Warrants constitute valid and binding obligations of the Company
to issue and sell, upon exercise thereof and payment of the respective exercise
prices therefor, the number and type of securities of the Company called for
thereby in accordance with the terms thereof, and such Placement Warrants are
enforceable against the Company in accordance with their respective terms,
except: (i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally; (ii) as
enforceability of any indemnification or contribution provision may be limited
under foreign, federal and state securities laws; and (iii) that the remedy
of
specific performance and injunctive and other forms of equitable relief may
be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. The Ordinary Shares issuable
upon
exercise of the Placement Warrants have been reserved and, when issued in
accordance with the terms of the Placement Warrants, will be duly and validly
authorized, validly issued, fully paid and non-assessable, and the holders
thereof are not and will not be subject to personal liability by reason of
being
such holders.
2.8.4.
No
Integration
.
Neither the Company nor any of its affiliates has, prior to the date hereof,
made any offer or sale of any securities which are required to be “integrated”
pursuant to the Act or the Regulations with the offer and sale of the Securities
pursuant to the Registration Statement.
2.9.
Registration
Rights of Third Parties
.
Except as set forth in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus, no holders of any securities of the Company
or
any rights exercisable for or convertible or exchangeable into securities of
the
Company have the right to require the Company to register any such securities
of
the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10.
Validity
and Binding Effect of Agreements
.
This Agreement, the Warrant Agreement (as defined in Section 2.24 hereof),
the
Trust Agreement, the Services Agreement (as defined in Section 3.7.2 hereof),
the Subscription Agreement (as defined in Section 2.25.2 hereof), the
Representative’s Purchase Option (as defined in Section 1.3.1), the Escrow
Agreement (as defined in Section 2.25.3 hereof) and the Registration Rights
Agreement by and among the Company and the Initial Shareholders (the
“
Registration
Rights Agreement
”)
have been duly and validly authorized, executed and delivered by the Company
and
constitute valid and binding agreements of the Company, enforceable against
the
Company in accordance with their respective terms, except: (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally; (ii) as enforceability of
any indemnification or contribution provision may be limited under foreign,
federal and state laws; and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
Broadband
Capital Management LLC
2.11.
No
Conflicts, etc.
The execution, delivery, and performance by the Company of this Agreement,
the
Warrant Agreement, the Trust Agreement, the Services Agreement, the Subscription
Agreement, the Representative’s Purchase Option, the Escrow Agreement and the
Registration Rights Agreement, the consummation by the Company of the
transactions herein and therein contemplated and the compliance by the Company
with the terms hereof and thereof do not and will not, with or without the
giving of notice or the lapse of time or both: (i) result in a breach or
violation of, or conflict with any of the terms and provisions of, or constitute
a default under, or result in the creation, modification, termination or
imposition of any lien, charge or encumbrance upon any property or assets of
the
Company pursuant to the terms of any agreement, obligation, condition, covenant
or instrument to which the Company is a party or bound or to which its property
is subject except pursuant to the Trust Agreement; (ii) result in any violation
of the provisions of the Amended and Restated Memorandum and Articles of
Association or the Bylaws of the Company; or (iii) violate any existing
applicable statute, law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over
the
Company or any of its properties or business.
2.12.
No
Defaults; Violations
.
No material default or violation exists in the due performance and observance
of
any term, covenant or condition of any material license, contract, indenture,
mortgage, deed of trust, note, loan or credit agreement, or any other agreement
or instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its Amended
and Restated Memorandum and Articles of Association or Bylaws or in violation
of
any material franchise, license, permit, applicable law, rule, regulation,
judgment or decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its properties or
businesses.
2.13.
Corporate
Power; Licenses; Consents
.
2.13.1.
Conduct
of Business
.
The Company has all requisite corporate power and authority, and has all
necessary authorizations, approvals, orders, licenses, certificates and permits
of and from all governmental regulatory officials and bodies that it needs
as of
the date hereof to conduct its business for the purposes described in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus.
The
disclosures in the Registration Statement, the Sale Preliminary Prospectus
and
the Prospectus concerning the effects of foreign, federal, state and local
regulation on this Offering and the Company’s business purpose as currently
contemplated are correct in all material respects and do not omit to state
a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Since its formation, the Company has conducted no business
and
has incurred no liabilities other than in connection with and in furtherance
of
the Offering.
2.13.2.
Transactions
Contemplated Herein
.
The Company has all corporate power and authority to enter into this Agreement
and to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have
been
obtained. No consent, authorization or order of, and no filing with, any court,
government agency or other body, foreign or domestic, is required for the valid
issuance, sale and delivery, of the Securities and the consummation of the
transactions and agreements contemplated by this Agreement, the Warrant
Agreement, the Trust Agreement, the Subscription Agreement, the Services
Agreement, the Representative’s Purchase Option, the Registration Rights
Agreement and the Escrow Agreement and as contemplated by the Registration
Statement, the Sale Preliminary Prospectus and Prospectus, except with respect
to applicable foreign, federal and state securities laws and the rules and
regulations promulgated by the Financial Industry Regulatory Authority, Inc.
(“
FINRA
”).
Broadband
Capital Management LLC
2.14.
D&O
Questionnaires
.
All information contained in the questionnaires (the “
Questionnaires
”)
completed by each of the Company’s officers and directors (the “
Directors/Officers
”)
and Initial Shareholders (as defined below) immediately prior to the Offering
and provided to the Underwriters as well as the biographies attached as exhibits
to each person’s Insider Letter (as defined in Section 2.25.1) is true and
correct and the Company has not become aware of any information which would
cause the information disclosed in the questionnaires completed by the
Directors/Officers and Initial Shareholders to become inaccurate and
incorrect.
2.15.
Litigation;
Governmental Proceedings
.
There is no action, suit, proceeding, inquiry, arbitration, investigation,
litigation or governmental proceeding pending or, to the best of the Company’s
knowledge, threatened against, or involving the Company or, to the best of
the
Company’s knowledge, any of the Directors/Officers or any of the shareholders of
the Company immediately prior to the Offering ( the “
Initial
Shareholders
”)
which has not been disclosed in the Registration Statement, the Questionnaires,
the Sale Preliminary Prospectus and the Prospectus.
2.16.
Good
Standing
.
The Company has been duly organized and is validly existing as a corporation
and
is in good standing under the laws of its jurisdiction of incorporation and
is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the conduct
of business requires such qualification, except where the failure to qualify
would not have a material adverse effect on the Company, its business, assets
or
operations.
2.17.
No
Contemplation of a Business Combination
.
Prior to the date hereof, no Company Affiliate (as hereinafter defined) has,
and
as of the Closing, the Company and such Company Affiliates will not have: (a)
had any specific Business Combination under consideration or contemplation;
(b)
directly or indirectly, contacted any potential target business or their
representatives or had any discussions, formal or otherwise, with respect to
effecting any potential Business Combination with the Company or taken any
measure, directly or indirectly to locate a target business; or (c) engaged
or
retained any agent or other representative to identify or locate any suitable
acquisition candidate for the Company.
2.18.
Transactions
Affecting Disclosure to FINRA
.
Broadband
Capital Management LLC
2.18.1.
Except
as described in the Registration Statement, the Sale Preliminary Prospectus
and
the Prospectus, there are no claims, payments, arrangements, agreements or
understandings relating to the payment of a finder’s, consulting or origination
fee by the Company or any Company Affiliate with respect to the sale of the
Securities hereunder or any other arrangements, agreements or understandings
of
the Company or, to the Company’s knowledge, any Initial Shareholder that may
affect the Underwriters’ compensation, as determined by FINRA.
2.18.2.
The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise,
in consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company; (ii)
to
any FINRA member; or (iii) to any person or entity that has any direct or
indirect affiliation or association with any FINRA member, within the twelve
months prior to the Effective Date, other than payments to Broadband in
connection with the Offering.
2.18.3. Other
than Robert Eu, Stephen Cannon, Lee Ting, W.R. Hambrecht + Co., LLC, AEX and
the
1980 Hambrecht Trust no Directors/Officers, or any direct or indirect beneficial
owner of any class of the Company’s securities, including the Initial
Shareholders and holders of securities purchased in the Private Placement
(whether debt or equity, registered or unregistered, regardless of the time
acquired or the source from which derived) (any such individual or entity,
a
“
Company Affiliate
”) is a member, a person associated, or
affiliated with a member of FINRA.
2.18.4. Other
than Robert Eu, Stephen Cannon, Lee Ting, W.R. Hambrecht + Co., LLC, AEX and
the
1980 Hambrecht Trust, no Company Affiliate is an owner of stock or other
securities of any member of FINRA (other than securities purchased on the open
market).
2.18.5. Other
than William Hambrecht, no Company Affiliate has made a subordinated loan to
any
member of FINRA.
2.18.6.
No
proceeds from the sale of the Public Securities (excluding underwriting
compensation), the Representative’s Securities or Placement Securities will be
paid to any FINRA member, or any persons associated or affiliated with a member
of FINRA, except as specifically authorized herein.
2.18.7.
Except
with respect to Broadband, the Company has not issued any warrants or other
securities, or granted any options, directly or indirectly to anyone who is
a
potential underwriter in the Offering or a related person (as defined by FINRA
rules) of such an underwriter within the 180-day period prior to the initial
filing date of the Registration Statement.
2.18.8.
No
person to whom securities of the Company have been privately issued within
the
180-day period prior to the initial filing date of the Registration Statement
has any relationship or affiliation or association with any member of FINRA.
Broadband
Capital Management LLC
2.18.9.
No
FINRA member intending to participate in the Offering has a conflict of interest
with the Company. For this purpose, a “conflict of interest” exists when a
member of FINRA and/or its associated persons, parent or affiliates in the
aggregate beneficially own 10% or more of the Company’s outstanding subordinated
debt or common equity, or 10% or more of the Company’s preferred equity.
“Members participating in the Offering” include managing agents, syndicate group
members and all dealers which are members of FINRA.
2.18.10.
Except
with respect to Broadband in connection with the Offering, the Company has
not
entered into any agreement or arrangement (including, without limitation, any
consulting agreement or any other type of agreement) during the 180-day period
prior to the initial filing date of the Registration Statement, which
arrangement or agreement provides for the receipt of any item of value and/or
the transfer or issuance of any warrants, options, or other securities from
the
Company to a FINRA member, any person associated with a member (as defined
by
FINRA rules), any potential underwriters in the Offering and/or any related
persons.
2.19.
Taxes.
2.19.1.
There are no transfer taxes or other similar fees or charges under Cayman
Islands law, U.S. federal law or the laws of any U.S. state or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance or sale by the Company of the
Securities.
2.19.2.
The Company has filed all non-U.S., U.S. federal, state and local tax returns
that are required to be a filed or has requested extensions thereof, except
in
any case in which the failure to so file would not have a material adverse
effect on the condition (financial or otherwise), prospects, earnings, business
or properties of the Company, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Registration Statement, the Sale Preliminary Prospectus
or
Prospectus and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing in due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as would not have a material
adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated
by
the Registration Statement, the Sale Preliminary Prospectus or Prospectus.
2.20.
Foreign
Corrupt Practices Act
.
Neither the Company nor any of the Company Affiliates or any other person acting
on behalf of the Company is aware of or has taken any action, directly or
indirectly, that: (i) would result in a violation by such persons of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “
FCPA
”)
or otherwise subject the Company to any damage or penalty in any civil, criminal
or governmental litigation or proceeding; (ii) if not done in the past, might
have had a material adverse effect on the Company or the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Registration Statement and the Prospectus or (iii) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company, including, without limitation, given or agreed
to
give any money, gift or similar benefit (other than legal price concessions
to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed transaction).
The Company’s internal accounting controls and procedures are sufficient to
cause the Company to comply with the Foreign Corrupt Practices Act of 1977,
as
amended.
Broadband
Capital Management LLC
2.21.
Currency
and Foreign Transactions Reporting Act
.
The operations of the Company are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements
of
the Currency and Foreign Transaction Reporting Act of 1970, as amended, the
money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the
“
Money
Laundering Laws
”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
2.22.
Patriot
Act
.
Neither the Company nor any Company Affiliate has violated: (i) the Bank Secrecy
Act, as amended, or (iii) the Uniting and Strengthening of America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT)
Act of 2001, and/or the rules and regulations promulgated under any such law,
or
any successor law.
2.23.
Officers’
Certificate
.
Any certificate signed by any duly authorized officer of the Company and
delivered to the Representative or to its counsel shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
2.24.
Warrant
Agreement
.
The Company has entered into a warrant agreement with respect to the Warrants
and the Placement Warrants with Continental Stock Transfer & Trust Company
substantially in the form filed as an exhibit to the Registration Statement
(the
“
Warrant
Agreement
”).
2.25.
Agreements
With Company Affiliates
.
2.25.1.
Insider
Letters
.
The Company has caused to be duly executed legally binding and enforceable
agreements (except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally, (ii) as enforceability of any indemnification, contribution or
noncompete provision may be limited under foreign, federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and
other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought)
annexed as exhibits to the Registration Statement (the “
Insider
Letter
”),
pursuant to which each of the Company Affiliates agrees to certain matters,
including but not limited to, the voting of Ordinary Shares held by them and
certain matters described as being agreed to by them under the “Proposed
Business” Section of the Registration Statement, the Sale Preliminary Prospectus
and Prospectus.
Broadband
Capital Management LLC
2.25.2.
Subscription
Agreement
.
The Placement Investor has executed and delivered a subscription agreement,
annexed as an exhibit to the Registration Statement (the “
Subscription
Agreement
”),
pursuant to which the Placement Investor has, among other things, purchased
1,150,000 Placement Warrants in the Private Placement. Pursuant to the
Subscription Agreement, the Placement Investor has waived any and all rights
and
claims that it may have to any proceeds, and any interest thereon, held in
the
Trust Account in respect of the Placement Securities in the event that a
Business Combination is not consummated and the Trust Account is liquidated
in
accordance with the terms of the Trust Agreement.
2.25.3.
Escrow
Agreement
.
The Company has caused the Initial Shareholders, to the extent they own Ordinary
Shares and Warrants of the Company prior to the Offering, to enter into an
escrow agreement (the “
Escrow
Agreement
”)
with Continental Stock Transfer & Trust Company (the “
Escrow
Agent
”)
substantially in the form filed as an exhibit to the Registration Statement
whereby the Ordinary Shares and Warrants owned by such parties prior to the
Offering will be held in escrow by the Escrow Agent for a period (the
“
Escrow
Period
”)
commencing on the Effective Date and (i) for the Ordinary Shares, expiring
on
the first anniversary of the consummation of the Business Combination; and
(ii)
for the Warrants, expiring upon consummation of the Business Combination. During
the Escrow Period, such parties shall be prohibited from selling or otherwise
transferring such securities (except (a) to spouses and children of such parties
and trusts established for their benefit or (b) after the consummation of a
Business Combination, and solely with regards to the Ordinary Shares, to
participate in a transaction whereby all the outstanding Ordinary Shares of
the
Company are exchanged or converted into cash or another entity’s securities;
provided, however, such Initial Shareholders shall retain the right to vote
such
Ordinary Shares, as applicable. To the Company’s knowledge, the Escrow Agreement
is enforceable against each of the Initial Shareholders and will not, with
or
without the giving of notice or the lapse of time or both, result in a breach
of, or conflict with, any of the terms and provisions of, or constitute a
default under, an agreement or instrument to which any of the Initial
Shareholders is a party. The Escrow Agreement shall not be amended, modified
or
otherwise changed without the prior written consent of Broadband, such consent
not to be unreasonably withheld.
2.25.4.
No Director/Officer (as defined below) is subject to any non-competition
agreement or non-solicitation agreement with any employer or prior employer
which could materially affect his ability to be and act in the capacity of
a
Director/Officer of the Company.
2.26.
Investment
Management Trust Agreement
.
The Company has entered into the Trust Agreement with respect to certain
proceeds of the Offering and the Private Placement substantially in the form
filed as an exhibit to the Registration Statement.
Broadband
Capital Management LLC
2.27.
Covenants
Not to Compete
.
No Company Affiliate is subject to any noncompetition agreement or
non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be a director, officer or employee of the
Company.
2.28.
Investments
.
No more than 45% of the “value” (as defined in Section 2(a)(41) of the
Investment Company Act of 1940 (“
Investment
Company Act
”))
of the Company’s total assets (exclusive of cash items and “Government
Securities,” as defined in Section 2(a)(16) of the Investment Company Act)
consist of, and no more than 45% of the Company’s net income after taxes is
derived from, securities other than Government Securities.
2.29.
Subsidiaries
.
The Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.30.
Related
Party Transactions
.
No relationship, direct or indirect, exists between or among any of the Company
or any Company Affiliate, on the one hand, and any director, officer,
shareholder, customer or supplier of the Company or any Company Affiliate,
on
the other hand, which is required by the Act, the Exchange Act or the
Regulations to be described in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus which is not so described and described as
required. There are no outstanding loans, advances (except normal advances
for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus. The Company has not extended or maintained credit, arranged for
the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or officer of the Company.
2.31.
No
Influence
.
The Company has not offered, or caused the Underwriters to offer, the Firm
Units
to any person or entity with the intention of unlawfully influencing: (a) a
customer or supplier of the Company or any affiliate of the Company to alter
the
customer’s or supplier’s level or type of business with the Company or such
affiliate or (b) a journalist or publication to write or publish favorable
information about the Company or any such affiliate.
2.32.
Sarbanes-Oxley
.
The Company is in material compliance with the provisions of the Sarbanes-Oxley
Act of 2002, as amended, and the rules and regulations promulgated thereunder
and related or similar rules and regulations promulgated by any governmental
or
self regulatory entity or agency, that are applicable to it as of the date
hereof.
2.33.
Quotation
of the Public Securities on the OTC Bulletin Board
.
As of the Effective Date, the Public Securities have been authorized for
quotation on the
OTC
Bulletin Board
and, to the Company’s knowledge, no proceedings have been instituted or
threatened which would effect, and no event or circumstance has occurred as
of
the Effective Date which is reasonably likely to effect, the quotation of the
Public Securities on the
OTC
Bulletin Board
.
2.34.
Definition
of “Knowledge”
.
As used in herein, the term “
knowledge
of the Company
”
(or similar language) shall mean the knowledge of the officers and directors
of
the Company who are named in the Sale Preliminary Prospectus and Prospectus,
with the assumption that such officers and directors shall have made reasonable
and diligent inquiry of the matters presented.
Broadband
Capital Management LLC
3.
Covenants
of the Company
.
The Company covenants and agrees as follows:
3.1.
Amendments
to Registration Statement
.
The Company will deliver to the Representative, prior to filing, any amendment
or supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and shall not file any such amendment or supplement
to
which the Representative shall reasonably object in writing.
3.2.
Federal
Securities Laws
.
3.2.1.
Compliance
.
During the time when a prospectus is required to be delivered under the Act,
the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary
to
permit the continuance of sales of or dealings in the Public Securities in
accordance with the provisions hereof and the Prospectus. If at any time when
a
Prospectus relating to the Public Securities is required to be delivered under
the Act, any event shall have occurred as a result of which, in the opinion
of
counsel for the Company or counsel for the Underwriters, the Sale Preliminary
Prospectus and the Prospectus, as then amended or supplemented includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading, or if it is
necessary during such period to amend the Registration Statement or amend or
supplement the Sale Preliminary Prospectus and Prospectus to comply with the
Act, the Company will notify the Representative promptly and prepare and file
with the Commission, subject to Section 3.1 hereof, an appropriate amendment
to
the Registration Statement or amendment or supplement to the Sale Preliminary
Prospectus and Prospectus (at the expense of the Company) so as to correct
such
statement or omission or effect such compliance.
3.2.2.
Filing
of Final Prospectus
.
The Company will file the Prospectus (in form and substance satisfactory to
the
Representative) with the Commission pursuant to the requirements of Rule 424
of
the Regulations.
3.2.3.
Exchange
Act Registration
.
For a period of five years from the Effective Date, or until such earlier time
upon which the Company is required to be liquidated and dissolved, the Company
will use its best efforts to maintain the registration of the Units, Ordinary
Shares and Warrants (in the case of the Warrants, until the Warrants expire
and
are no longer exercisable) under the provisions of the Exchange Act. The Company
will not deregister the Units, Ordinary Shares or Warrants under the Exchange
Act without the prior written consent of Broadband.
3.2.4.
Sarbanes-Oxley
Compliance
.
As soon as it is legally required to do so, the Company shall take all actions
necessary to obtain and thereafter maintain material compliance with each
applicable provision of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder and related or similar rules and regulations
promulgated by any other governmental or self regulatory entity or agency with
jurisdiction over the Company.
Broadband
Capital Management LLC
3.3.
Blue
Sky Filing
.
Unless the Securities are listed or quoted, as the case may be, on the New
York
Stock Exchange, the Nasdaq Global Market or AMEX, the Company will endeavor
in
good faith, in cooperation with the Representative, at or prior to the time
the
Registration Statement becomes effective, to qualify the Public Securities
for
offering and sale under the securities laws of such jurisdictions as the
Representative may reasonably designate, provided that no such qualification
shall be required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction. In each jurisdiction where
such
qualification shall be effected, the Company will, unless the Representative
agrees that such action is not at the time necessary or advisable, use all
reasonable efforts to file and make such statements or reports at such times
as
are or may be required by the laws of such jurisdiction.
3.4.
Delivery
of Materials to Underwriters
.
The Company will deliver to each of the several Underwriters, without charge
and
from time to time during the period when a prospectus is required to be
delivered under the Act or the Exchange Act, such number of copies of each
Sale
Preliminary Prospectus, the Prospectus and all amendments and supplements to
such documents as such Underwriters may reasonably request and, as soon as
the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to the Representative two manually executed Registration Statements,
including exhibits, and all post-effective amendments thereto and copies of
all
exhibits filed therewith or incorporated therein by reference and all manually
executed consents of certified experts.
3.5.
Effectiveness
and Events Requiring Notice to the Representative
.
The Company will use its best efforts to cause the Registration Statement to
remain effective and will notify the Representative immediately and confirm
the
notice in writing: (i) of the effectiveness of the Registration Statement and
any amendment thereto; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, or any
post-effective amendment thereto or preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or of the initiation, or the
threatening, of any proceeding for that purpose; (iii) of the issuance by any
foreign or state securities commission of any proceedings for the suspension
of
the qualification of the Public Securities for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose; (iv) of the mailing and delivery to the Commission for filing
of
any amendment or supplement to the Registration Statement or Prospectus; (v)
of
the receipt of any comments or request for any additional information from
the
Commission; and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company or its counsel,
makes
any statement of a material fact made in the Registration Statement, the Sale
Preliminary Prospectus or the Prospectus untrue or that requires the making
of
any changes in the Registration Statement, the Sale Preliminary Prospectus
and
Prospectus in order to make the statements therein, (with respect to the
Prospectus and the Sale Preliminary Prospectus and in light of the circumstances
under which they were made), not misleading. If the Commission or any foreign
or
state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
Broadband
Capital Management LLC
3.6.
Review
of Financial Statements
.
Until the earlier of five years from the Effective Date, or until such earlier
upon which the Company is required to be liquidated and dissolved, the Company,
at its expense, shall cause its regularly engaged independent certified public
accountants to review (but not audit) the Company’s financial statements for
each of the first three fiscal quarters prior to the announcement of quarterly
financial information, the filing of the Company’s Form 10-Q quarterly report
and the mailing of quarterly financial information to shareholders.
3.7.
Affiliated
Transactions
.
3.7.1.
Business
Combinations
.
The Company will not consummate a Business Combination with any entity which
is
affiliated with any Company Affiliate unless the Company obtains an opinion
from
an independent investment banking firm that the Business Combination is fair
to
the Company’s shareholders from a financial perspective.
3.7.2.
Administrative
Services
.
The Company has entered into an agreement (the “
Services
Agreement
”)
with Hambrecht Eu Capital Management LLC, in the form filed as an exhibit to
the
Registration Statement pursuant to which Hambrecht Eu Capital Management LLC
will make available to the Company general and administrative services including
office space, utilities, receptionist and secretarial support for the Company’s
use for $7,500 per month.
3.7.3.
Compensation
.
Except as otherwise set forth in this Section 3.7, the Company shall not pay
any
Initial Shareholder or Company Affiliate or any of their affiliates any fees
or
compensation from the Company, for services rendered to the Company prior to,
or
in connection with, this Offering or the consummation of a Business Combination;
provided
that
the Initial Shareholders shall be entitled to reimbursement from the Company
for
their out-of-pocket expenses incurred on the Company’s behalf, which includes an
aggregate of $290,000 in non-interest bearing unsecured loans which were made
to
the Company prior to the effective date of the Registration Statement, and
are
due within 15 days following the Company’s consummation of the Offering, and
other expenses incurred by them in connection with seeking and consummating
a
Business Combination.
3.8.
Secondary
Market Trading and Standard & Poor’s
.
In the event the Public Securities are not listed on the New York Stock Exchange
or AMEX or quoted on the Nasdaq Global Market: (a) the Company will apply to
be
included in Standard and Poor’s Daily News and Corporation Records Corporate
Descriptions for a period commencing on the Effective Date and expiring on
the
fifth anniversary of the consummation of a Business Combination, (b) the Company
shall take such steps as may be necessary to obtain a secondary market trading
exemption for the Company’s securities in such jurisdictions as may be requested
by the Representative; provided, however, no qualification shall be required
in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. The Company shall also take such other action
as
may be reasonably requested by the Representative to obtain a secondary market
trading exemption I such other states as may be requested by the Representative.
Broadband
Capital Management LLC
3.9.
Financial
Public Relations Firm
.
Promptly after the execution of a definitive agreement for a Business
Combination, the Company shall retain a financial public relations firm
reasonably acceptable to the Representative for a term to be agreed upon by
the
Company and the Representative.
3.10.
Reports
to the Representative
.
3.10.1.
Periodic
Reports, etc.
For a period of five years from the Effective Date or until such earlier time
upon which the Company is required to be liquidated and dissolved, the Company
will furnish to the Representative (Attn: Corby T. Hocker, Managing Director)
and its counsel copies of such financial statements and other periodic and
special reports as the Company from time to time furnishes generally to holders
of any class of its securities, and promptly furnish to the Representative:
(i)
a copy of each periodic report the Company shall be required to file with the
Commission; (ii) a copy of every press release and every news item and article
with respect to the Company or its affairs which was released by the Company;
(iii) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received
or
prepared by the Company; (iv) five copies of each registration statement filed
by the Company with the Commission under the Securities Act; (v) a copy of
monthly statements, if any, setting forth such information regarding the
Company’s results of operations and financial position (including balance sheet,
profit and loss statements and data regarding outstanding purchase orders)
as is
regularly prepared by management of the Company; and (vi) such additional
documents and information with respect to the Company and the affairs of any
future subsidiaries of the Company as the Representative may from time to time
reasonably request; provided that the Representative shall sign, if requested
by
the Company, a Regulation FD compliant confidentiality agreement which is
reasonably acceptable to the Representative and its counsel in connection with
the Representative’s receipt of such information. Documents filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System (“
EDGAR
”)
shall be deemed to have been delivered to the Representative pursuant to this
section.
3.10.2.
Transfer
Sheets
.
For a period of five years following the Effective Date or until such earlier
time upon which the Company is required to be liquidated, the Company shall
retain a transfer and warrant agent acceptable to the Representative (the
“
Transfer
Agent
”)
and during the two (2) year period following the Closing Date, will furnish
to
the Underwriters at the Company’s sole cost and expense such transfer sheets of
the Company’s securities as the Representative may request, including the daily
and monthly consolidated transfer sheets of the Transfer Agent and DTC.
Continental Stock Transfer & Trust Company is acceptable to the
Underwriters. In addition, for a period of two (2) years from the Closing Date,
the Company, at its expense, shall provide the Representative a subscription
to
the Company’s weekly Depository Transfer Company Security Position
Reports.
Broadband
Capital Management LLC
3.10.3.
Secondary
Market Trading Survey
.
So long as the Public Securities are not listed or quoted, as the case may
be,
on the New York Stock Exchange, AMEX or the Nasdaq Global Market, or until
such
earlier time upon which the Company is required to be liquidated, the Company
shall engage Ellenoff Grossman & Schole LLP (“
EG&S
”),
for an initial fee of $5,000, plus expenses, payable on the Closing Date, to
deliver and update to the Underwriters on a timely basis, but in any event
on
the Effective Date and at the beginning of each fiscal quarter for an additional
$5,000 per quarter, plus expenses, a written report detailing those states
in
which the Public Securities may be traded in non-issuer transaction under the
Blue Sky laws of the fifty States (the “
Secondary
Market Trading Survey
”).
3.11.
Disqualification
of Form F-1 and F-3 and/or S-1 and S-3
.
For a period equal to
seven
years from the date hereof, the Company will not take any action or actions
which may prevent or disqualify the Company’s use of Form F-1 or F-3 and/or Form
S-1 and S-3 (or other appropriate form) for the registration of the Warrants
under the Act.
3.12.
Payment
of Expenses
.
3.12.1.
General
Expenses Related to the Offering
. The Company hereby agrees to pay on each
of the Closing Date and the Option Closing Date, if any, to the extent not
paid
at Closing Date, all fees and expenses incident to the performance of the
obligations of the Company under this Agreement, including, but not limited
to:
(i) the preparation, printing, filing and mailing (including the payment of
postage with respect to such mailing) of the Registration Statement, the Sale
Preliminary Prospectus, and the final Prospectus and mailing of this Agreement
and related documents, including the cost of all copies thereof and any
amendments thereof or supplements thereto supplied to the Underwriters in
quantities as may be required by the Underwriters; (ii) the printing, engraving,
issuance and delivery of the Units, the Ordinary Shares and the Warrants
included in the Units, including any transfer or other taxes payable thereon;
(iii) the qualification of the Public Securities under state or foreign
securities or Blue Sky laws, including the costs of printing and mailing the
“Preliminary Blue Sky Memorandum,” and all amendments and supplements thereto,
fees in an amount equal to $35,000 and disbursements for the Representatives’
counsel retained for such purpose, and a fee of $5,000 payable to the
Representative’s counsel for the preparation of the Secondary Market Trading
Survey; (iv) filing fees, costs and expenses incurred in registering the
Offering with FINRA (including all COBRADesk fees); (v) fees and disbursements
of the transfer and warrant agent; (vi) costs of placing “tombstone”
advertisements in the
The Wall Street Journal
, the
New York
Times
and a third publication to be selected by the Representative, in an
amount not to exceed $25,000; (vii) the Company’s own expenses associated with
“due diligence” meetings; (viii) the preparation, binding and delivery of
leather bound volumes in quantity, form and style reasonably satisfactory to
the
Representative and transaction lucite cubes or similar commemorative items
in a
style and quantity as reasonably requested by the Representative; (ix) all
Company costs and expenses associated with “road show” marketing and “due
diligence” trips for the Company’s management to meet with prospective
investors, including without limitation, all travel, food and lodging expenses
associated with such trips incurred by the Company; and (x) all other costs
and
expenses incident to the performance of its obligations hereunder which are
not
otherwise specifically provided for in this Section 3.12.1. The Representative
may deduct from the net proceeds of the Offering payable to the Company on
the
Closing Date, or the Option Closing Date, if any, the expenses set forth above
to be paid by the Company to the Representative and others. The Company also
agrees that it will engage and pay for, at the Company’s expense, an
investigative search firm to conduct an investigation of the principals of
the
Company (such investigation to cost no more than $25,000 in the aggregate).
If
the Offering is not consummated for any reason whatsoever, then the Company
shall reimburse the Representative in full for its out of pocket accountable
expenses actually incurred by the Representative, including, without limitation,
its legal fees (which legal fees shall not exceed $50,000 less any amounts
previously paid).
Broadband
Capital Management LLC
3.12.2.
Fee
on Business Combination
.
Upon consummation of a Business Combination, the Company further agrees that
in
addition to the expenses payable pursuant to Sections 3.12.1, it will pay to
the
Underwriters and the Representative the Contingent Discount, subject to Section
1.5 hereof.
3.13.
Application
of Net Proceeds
.
The Company will apply the net proceeds from the Private Placement and this
Offering received by it in a manner substantially consistent with the
application described under the caption “Use Of Proceeds” in the
Prospectus.
3.14.
Delivery
of Earnings Statements to Security Holders
.
The Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar
month following the Effective Date, an earnings statement (which need not be
certified by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Act) covering a period
of
at least twelve consecutive months beginning after the Effective
Date.
3.15.
Notice
to FINRA
.
3.15.1.
Business
Combination
.
In the event any person or entity (regardless of any FINRA affiliation or
association) is engaged to assist the Company in its search for a merger
candidate or to provide any other merger and acquisition services, the Company
will provide the following information (the “
Merger
Information
”)
to FINRA and Representative prior to the consummation of the Business
Combination: (i) complete details of all services and copies of agreements
governing such services; and (ii) justification as to why the person or entity
providing the merger and acquisition services should not be considered an
“underwriter and related person” with respect to the Company’s initial public
offering, as such term is defined in Rule 2710 of FINRA’s Conduct Rules. The
Company also agrees that proper disclosure of such arrangement or potential
arrangement will be made in the proxy statement which the Company will file
for
purposes of soliciting shareholder approval for the Business Combination. Upon
the Company’s delivery of the Merger Information to the Representative, the
Company hereby expressly authorizes the Representative to provide such
information directly to FINRA as a result of representations the Representative
has made to FINRA in connection with the Offering.
Broadband
Capital Management LLC
3.15.2.
Broker/Dealer
.
In
the event the Company intends to register as a broker/dealer, merge with or
acquire a registered broker/dealer, or otherwise become a member of FINRA,
it
shall promptly notify FINRA.
3.16.
Stabilization
.
Neither the Company, nor, to its knowledge, any of its employees, directors
or
shareholders (without the consent of Broadband) has taken or will take, directly
or indirectly, any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Units.
3.17.
Internal
Controls
.
The Company will maintain a system of internal accounting controls sufficient
to
provide reasonable assurances that: (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary in order to permit preparation of financial statements
in
accordance with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.18.
Accountants
.
For a period of five years from the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company shall retain
Rothstein or other independent public accountants reasonably acceptable to
Broadband.
3.19.
Form
8-K’s
.
The Company shall, on the date hereof, retain its independent public accountants
to audit the financial statements of the Company as of the Closing Date (the
“
Audited
Financial Statements
”)
reflecting the receipt by the Company of the proceeds of the Offering and
Private Placement as well as the proceeds from the exercise of the
Over-allotment Option if such exercise has occurred on the date of the
Prospectus. Within three (3) days of the Effective Date, the Company shall
file
a Current Report on Form 8-K (or Form 6-K, if applicable) with the Commission,
which Report shall contain the Company’s Audited Financial Statements. The
Company shall make a similar filing (without financial statements) upon the
Underwriters’ exercise of the Over-allotment Option, if any.
3.20.
FINRA
.
The Company shall advise FINRA if it is aware that any 5% or greater shareholder
of the Company becomes an affiliate or associated person of a FINRA member
participating in the distribution of the Securities.
3.21.
Corporate
Proceedings
.
All corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall
have
been done to the reasonable satisfaction to counsel for the
Underwriters.
3.22.
Investment
Company
.
The Company shall cause the proceeds of the Offering to be held in the Trust
Account to be invested only in “government securities” with specific maturity
dates or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act as set forth in the Trust Agreement
and disclosed in the Prospectus. The Company will otherwise conduct its business
in a manner so that it will not become subject to the Investment Company Act.
Furthermore, once the Company consummates a Business Combination, it will be
engaged in a business other than that of investing, reinvesting, owning, holding
or trading securities.
Broadband
Capital Management LLC
3.24.
Colorado
Trust Filing
.
In the event the Securities are registered in the State of Colorado, the Company
will cause a Colorado Form ES to be filed with the Commissioner of the State
of
Colorado no less than 10 days prior to the distribution of the Trust Fund in
connection with a Business Combination and will do all things necessary to
comply with Section 11-51-302 and Rule 51-3.4 of the Colorado Securities
Act.
3.25.
Press
Releases
.
The Company agrees that it will not issue press releases or engage in any other
publicity, without Broadband’s prior written consent (not to be unreasonably
withheld), for a period of ninety (90) days after the Closing Date.
3.26.
Insurance
.
The
Company will maintain insurance of the types and in the amounts which are
customary for companies engaged in similar businesses, including, but not
limited to: (i) directors’ and officers’ insurance (including insurance covering
the Company, its directors and officers for liabilities or losses arising in
connection with this Offering, including, without limitation, liabilities or
losses arising under the Act, the Exchange Act, the Rules and Regulations and
applicable foreign securities laws), (ii) insurance covering real and personal
property owned or leased by the Company against theft, damage, destruction,
acts
of vandalism and all other risks customarily insured against, and (iii) business
interruption insurance. The Company has not been refused any insurance coverage
sought or applied for, and the Company has no reason to believe that it will
not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a material adverse
effect. The Company shall be the sole beneficiary of each such policy.
Broadband
Capital Management LLC
3.27.
Electronic
Prospectus
.
The
Company shall cause to be prepared and delivered to the Representative, at
its
expense, within one (1) Business Day from the effective date of this Agreement,
an Electronic
Prospectus
to be used by the Underwriters in connection with the Offering. As used herein,
the term “
Electronic
Prospectus
”
means a form of prospectus, and any amendment or supplement thereto, that meets
each of the following conditions: (i) it shall be encoded in an electronic
format, satisfactory to the Representative, that may be transmitted
electronically by the other Underwriters to offerees and purchasers of the
Units
for at least the period during which a Prospectus relating to the Units is
required to be delivered under the Securities Act; (ii) it shall disclose the
same information as the paper prospectus and prospectus filed pursuant to EDGAR,
except to the extent that graphic and image material cannot be disseminated
electronically, in which case such graphic and image material shall be replaced
in the electronic prospectus with a fair and accurate narrative description
or
tabular representation of such material, as appropriate; and (iii) it shall
be
in or convertible into a paper format or an electronic format, satisfactory
to
the Representative, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time, without charge
to such recipients (other than any fee charged for subscription to the Internet
as a whole and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to EDGAR or otherwise
with the Commission and in the Registration Statement at the time it was
declared effective an undertaking that, upon
receipt
of a request by an investor or his or her representative within the period
when
a prospectus relating to the Units is required to be delivered under the
Securities Act, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
3.28.
Reservation
of Shares
.
The Company will reserve and keep available that maximum number of its
authorized but unissued securities which are issuable upon exercise of the
Warrants, the Placement Warrants and the Representative’s Securities outstanding
from time to time.
3.29.
Intentionally
Omitted.
3.30.
Private
Placement Proceeds
.
Immediately prior to the Effective Date, the Private Placement shall be
consummated and prior to the Closing Date, the Placement Investor shall deposit
the full purchase price of $1,150,000 into the Trust Account and shall provide
Broadband with evidence of the same.
3.31.
No
Amendment to Charter
.
The
Company covenants and agrees that it will not seek to amend or modify paragraph
170 of its Amended and Restated Memorandum and Articles of Association during
the Business Acquisition Period (as such term is defined in the Amended and
Restated Memorandum and Articles of Association).
3.31.1.
The
Company acknowledges that the purchasers of the Firm Units and the Option Units
in the Offering shall be deemed to be third party beneficiaries of this Section
3.31.
3.31.2.
The
Representative and the Company specifically agree that, except pursuant to
its
own terms, this Section 3.31 shall not be modified or amended in any
way
.
3.32.
Future
Financings
.
The Company agrees that neither it, nor any successor or subsidiary of the
Company, will consummate any public or private equity or debt financing prior
to
or in connection with the consummation of a Business Combination, unless all
investors in such financing expressly waive, in writing, any rights in or claims
against the Trust Fund.
Broadband
Capital Management LLC
3.33.
OTC
Bulletin Board Quotation
.
The Company will use its best efforts to maintain the quotation of the Public
Securities on the OTC Bulletin Board or a national securities exchange
acceptable to the Representative for a period of at least five (5) years from
the date of this Agreement.
4.
Conditions
of Underwriters’ Obligations
.
The obligations of the several Underwriters to purchase and pay for the Units,
as provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company as of the date hereof and as
of
each of the Closing Date and the Option Closing Date, if any, to the accuracy
of
the statements of officers of the Company made pursuant to the provisions hereof
and to the performance by the Company of its obligations hereunder and to the
following conditions:
4.1.
Regulatory
Matters
.
4.1.1.
Effectiveness
of Registration Statement
.
The Registration Statement shall have become effective not later than 5:00
p.m.,
New York time, on the date of this Agreement or such later date and time as
shall be consented to in writing by the Representative, and, at each of the
Closing Date and the Option Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for the purpose shall have been instituted or shall be pending
or
contemplated by the Commission and any request on the part of the Commission
for
additional information shall have been complied with to the reasonable
satisfaction of EG&S, as counsel to the Underwriters.
4.1.2.
FINRA
Clearance
.
By the Effective Date, the Representative shall have received clearance from
FINRA as to the amount of compensation allowable or payable to the Underwriters
as described in the Registration Statement.
4.1.3.
No
Commission Stop Order
.
At each of the Closing Date and the Option Closing Date, the Commission has
not
issued any order or threatened to issue any order preventing or suspending
the
use of any Preliminary Prospectus, the Prospectus or any part thereof, and
has
not instituted or threatened to institute any proceedings with respect to such
an order.
4.1.4.
No
Blue Sky Stop Orders
.
No order suspending the sale of the Units in any jurisdiction designated by
the
Representative pursuant to Section 3.3 hereof shall have been issued on either
the Closing Date or the Option Closing Date, and no proceedings for that purpose
shall have been instituted or shall be contemplated.
4.1.5.
OTC
Bulletin Board Quotation
.
The Public Securities shall have been approved for quotation on OTC Bulletin
Board.
4.2.
Company
Counsel Matters
.
Broadband
Capital Management LLC
4.2.1.
Closing
Date Opinion of Counsel
.
On the Closing Date, the Representative shall have received the favorable
opinion of Loeb & Loeb (“
Loeb
”)
and Conyers, Dill and Pearman (“
Conyers
”),
Cayman Islands counsel for the Company, dated the Closing Date, addressed to
the
Representative and in forms attached as Exhibits A and B hereto.
The
opinion of counsel(s) shall further include a statement to the effect that
such
counsel(s) participated in conferences with officers and other representatives
of the Company, representatives of the independent public accountants for the
Company and representatives of the Underwriters at which the contents of the
Registration Statement, the Sale Preliminary Prospectus, the Prospectus, and
related matters were discussed and although such counsel is not passing upon
and
does not assume any responsibility for the accuracy, completeness or fairness
of
the statements contained in the Registration Statement, the Sale Preliminary
Prospectus or the Prospectus (except as otherwise set forth in this opinion),
no
facts have come to the attention of such counsel which lead it to believe that
the Registration Statement, the Sale Preliminary Prospectus or the Prospectus
or
any amendment or supplement thereto, as of the date of such opinion or in the
case of the Sale Preliminary Prospectus, as of the date thereof, contained
any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial and statistical data
included in the Registration Statement, the Sale Preliminary Prospectus or
the
Prospectus).
4.2.2.
Option
Closing Date Opinion of Counsel
.
On the Option Closing Date, if any, the Representative shall have received
the
favorable opinion of Loeb and/or Conyers, dated the Option Closing Date,
addressed to the Representative and in form and substance reasonably
satisfactory to the counsel to the Representative, confirming as of the Option
Closing Date, the statements made by Loeb and/or Conyers in its opinion
delivered on the Closing Date.
4.2.3
Reliance
.
In rendering such opinion, such counsel may rely: (i) as to matters involving
the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to the
Representative) of other counsel reasonably acceptable to the Representative,
familiar with the applicable laws; and (ii) as to matters of fact, to the extent
they deem proper, on certificates or other written statements of officers of
the
Company and officers of departments of various jurisdiction having custody
of
documents respecting the corporate existence or good standing of the Company,
provided that copies of any such statements or certificates shall be delivered
to the Underwriters’ counsel if requested. The opinion of counsel for the
Company and any opinion relied upon by such counsel for the Company shall
include a statement to the effect that it may be relied upon by counsel for
the
Underwriters in its opinion delivered to the Underwriters.
4.3.
Cold
Comfort Letter
.
At the time this Agreement is executed, and at each of the Closing Date and
the
Option Closing Date, if any, the Representative shall have received a letter,
addressed to the Representative and in form and substance satisfactory in all
respects (including the non-material nature of the changes or decreases, if
any,
referred to in clause (iii) below) to the Representative and to EG&S from
Rothstein dated, respectively, as of the date of this Agreement and as of the
Closing Date and the Option Closing Date, if any:
Broadband
Capital Management LLC
(i)
Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have not, during
the periods covered by the financial statements included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, provided to
the
Company any non-audit services, as such term is used in Section 10A(g) of the
Exchange Act;
(ii)
Stating
that in their opinion the financial statements of the Company included in the
Registration Statement and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published Regulations thereunder;
(iii)
Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the shareholders
and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible
for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that:
(a)
the unaudited financial statements of the Company included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus do not comply
as
to form in all material respects with the applicable accounting requirements
of
the Act and the Regulations or are not fairly presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements of the Company included
in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus; or (b) at a date not later than five days prior to the Effective
Date, Closing Date or Option Closing Date, as the case may be, there was any
change in the capital stock or long-term debt of the Company, or any decrease
in
the shareholders’ equity of the Company as compared with amounts shown in the
December 31, 2007 balance sheet included in the Registration Statement, the
Sale
Preliminary Prospectus and the Prospectus, other than as set forth in or
contemplated by the Registration Statement, the Sale Preliminary Prospectus
and
the Prospectus, or, if there was any decrease, setting forth the amount of
such
decrease, and (c) during the period from January 1, 2008 to a specified date
not
later than two (2) days prior to the Effective Date, Closing Date or Option
Closing Date, as the case may be, there was any decrease in revenues, net
earnings or net earnings per Ordinary Share, in each case as compared with
the
corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement and the Prospectus, or, if there
was
any such decrease, setting forth the amount of such decrease;
(iv)
Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company;
Broadband
Capital Management LLC
(v)
Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus in each case to the extent that such amounts,
numbers, percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi)
Stating
that they have not during the immediately preceding five year period brought
to
the attention of the Company’s management any reportable condition related to
internal structure, design or operation as defined in the Statement on Auditing
Standards No. 60 “Communication of Internal Control Structure Related Matters
Noted in an Audit,” in the Company’s internal controls; and
(vii)
Statements
as to such other matters incident to the transaction contemplated hereby as
the
Representative may reasonably request.
4.4.
Officers’
Certificates
.
4.4.1.
Officers’
Certificate
.
At each of the Closing Date and the Option Closing Date, if any, the
Representative shall have received a certificate of the Company signed by the
Chairman of the Board or the President and the Secretary or Assistant Secretary
of the Company, dated the Closing Date or the Option Closing Date, as the case
may be, respectively, to the effect that the Company has performed all covenants
and complied with all conditions required by this Agreement to be performed
or
complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of Closing Date
and
the Option Closing Date, as the case may be, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct. In addition,
the Representative will have received such other and further certificates of
officers of the Company as the Representative may reasonably
request.
4.4.2.
Secretary’s
Certificate
.
At each of the Closing Date and the Option Closing Date, if any, the
Representative shall have received a certificate of the Company signed by the
Secretary or Assistant Secretary of the Company, dated the Closing Date or
the
Option Date, as the case may be, respectively, certifying: (i) that the By-Laws
and Amended and Restated Memorandum and Articles of Association of the Company
are true and complete, have not been modified and are in full force and effect;
(ii) that the resolutions relating to the public offering contemplated by this
Agreement are in full force and effect and have not been modified; (iii) all
correspondence between the Company or its counsel and the Commission; and (iv)
as to the incumbency of the officers of the Company. The documents referred
to
in such certificate shall be attached to such certificate.
Broadband
Capital Management LLC
4.5.
No
Material Changes
.
Prior to and on each of the Closing Date and the Option Closing Date, if any:
(i) there shall have been no material adverse change or development involving
a
prospective material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement,
the
Sale Preliminary Prospectus and Prospectus; (ii) no action suit or proceeding,
at law or in equity, shall have been pending or threatened against the Company
or any Company Affiliate before or by any court or foreign, federal or state
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the Company, except
as
set forth in the Registration Statement, the Sale Preliminary Prospectus and
Prospectus; (iii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or threatened by the Commission;
and (iv) the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus and any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and shall conform in all material respects to the
requirements of the Act and the Regulations, and none of the Registration
Statement, the Sale Preliminary Prospectus or the Prospectus, or any amendment
or supplement thereto shall contain any untrue statement of a material fact
or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein (in the case of the Sale Preliminary Prospectus
and
Prospectus, in light of the circumstances under which they were made), not
misleading.
4.6.
Delivery
of Agreements
.
4.6.1.
Effective
Date Deliveries
.
On the Effective Date, the Company shall have delivered to the Representative
executed copies of the Escrow Agreement, the Trust Agreement, the Warrant
Agreement, the Services Agreement and all of the Insider Letters.
4.6.2.
Closing
Date Deliveries
.
On the Closing Date, the Company shall have delivered to the Representative,
the
Representative’s Purchase Option.
5.
Indemnification
.
5.1.
Indemnification
of Underwriters
.
Broadband
Capital Management LLC
5.1.1.
General
.
Subject to the conditions set forth below, the Company agrees to indemnify
and
hold harmless each of the Underwriters and each dealer selected by the
Representative that participates in the offer and sale of the Units (each a
“
Selected
Dealer
”)
and each of their respective directors, officers and employees and each person,
if any, who controls any such Underwriter or dealer (“
controlling
person
”)
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, and its counsel, against any and all loss, liability, claim, damage and
expense whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, whether
arising out of any action between any of the Underwriters and the Company or
between any of the Underwriters and any third party or otherwise) to which
they
or any of them may become subject under the Act, the Exchange Act or any other
foreign, federal, state or local statute, law, rule, regulation or ordinance
or
at common law or otherwise or under the laws, rules and regulation of foreign
countries, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (i) any Preliminary Prospectus, the
Registration Statement, or the Prospectus (as from time to time each may be
amended and supplemented); (ii) in any post-effective amendment or amendments
or
any new registration statement and prospectus relating to any the securities
of
the Company described herein; or (iii) any application or other document or
written communication (in this Section 5 collectively called “
application
”)
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Units under the securities
laws thereof or filed with the Commission, any foreign or state securities
commission or agency, the American Stock Exchange, the OTC Bulletin Board or
Nasdaq or any securities exchange; or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company with
respect to an Underwriter by or on behalf of such Underwriter expressly for
use
in any Preliminary Prospectus, the Registration Statement the Prospectus or
any
amendment or supplement thereof, or in any application, as the case may be,
which furnished written information, it is expressly agreed, consists solely
of
the information described in the last sentence of Section 2.3.1. The Company
agrees promptly to notify the Representative of the commencement of any
litigation or proceedings against the Company or any of its officers, directors
or controlling persons in connection with the issue and sale of the Securities
or in connection with the Preliminary Prospectus, the Registration Statement
or
the Prospectus.
5.1.2.
Procedure
.
If any action is brought against an Underwriter or controlling person in respect
of which indemnity may be sought against the Company pursuant to Section 5.1.1,
such Underwriter shall promptly notify the Company in writing of the institution
of such action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the reasonable approval
of such Underwriter) and payment of actual expenses. Such Underwriter or
controlling person shall have the right to employ its or their own counsel
in
any such case, but the fees and expenses of such counsel shall be at the expense
of such Underwriter or such controlling person unless: (i) the employment of
such counsel at the expense of the Company shall have been authorized in writing
by the Company in connection with the defense of such action; (ii) the Company
shall not have employed counsel to have charge of the defense of such action;
or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events the reasonable fees and
expenses of not more than one additional firm of attorneys selected by the
Underwriter and/or controlling person shall be borne by the Company.
Notwithstanding anything to the contrary contained herein, if the Underwriter
or
controlling person shall assume the defense of such action as provided above,
the Company shall have the right to approve the terms of any settlement of
such
action which approval shall not be unreasonably withheld.
Broadband
Capital Management LLC
5.2.
Indemnification
of the Company
.
Each Underwriter, severally and not jointly, agrees to indemnify and hold
harmless the Company, its directors, officers, and employees and agents who
control the Company within the meaning of Section 15 of the Act or Section
20 of
the Exchange Act, and its counsel, against any and all loss, liability, claim,
damage and expense described in the foregoing indemnity from the Company to
the
several Underwriters, as incurred, but only with respect to untrue statements
or
omissions, or alleged untrue statements or omissions made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or in any application, in reliance upon, and in strict
conformity with, written information furnished to the Company with respect
to
such Underwriter by or on behalf of the Underwriter expressly for use in such
Registration Statement, Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto or in any such application, which furnished written
information, it is expressly agreed, consists solely of the information
described in the last sentence of Section 2.3.1. In case any action shall be
brought against the Company or any other person so indemnified based on any
Preliminary Prospectus, the Registration Statement, the Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have
the
rights and duties given to the Company, and the Company and each other person
so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.
5.3.
Contribution
.
5.3.1.
Contribution
Rights
.
In order to provide for just and equitable contribution under the Act in any
case in which (i) any person entitled to indemnification under this Section
5
makes claim for indemnification pursuant hereto but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding
the
fact that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be required on
the
part of any such person in circumstances for which indemnification is provided
under this Section 5, then, and in each such case, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, in such proportions
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
Prospectus bears to the initial offering price appearing thereon and the Company
is responsible for the balance; provided, that, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 5.3.1, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Public Securities underwritten by it
and
distributed to the public were offered to the public exceeds the amount of
any
damages that such Underwriter has otherwise been required to pay in respect
of
such losses, liabilities, claims, damages and expenses. For purposes of this
Section, each director, officer and employee of an Underwriter or the Company,
as applicable, and each person, if any, who controls an Underwriter or the
Company, as applicable, within the meaning of Section 15 of the Act shall have
the same rights to contribution as the Underwriters or the Company, as
applicable.
Broadband
Capital Management LLC
5.3.2.
Contribution
Procedure
.
Within fifteen days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party (“
contributing
party
”),
notify the contributing party of the commencement thereof, but the omission
to
so notify the contributing party will not relieve it from any liability which
it
may have to any other party other than for contribution hereunder. In case
any
such action, suit or proceeding is brought against any party, and such party
notifies a contributing party or its representative of the commencement thereof
within the aforesaid fifteen days, the contributing party will be entitled
to
participate therein with the notifying party and any other contributing party
similarly notified. Any such contributing party shall not be liable to any
party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution on account of any
settlement of any claim, action or proceeding effected by such party seeking
contribution without the written consent of such contributing party. The
contribution provisions contained in this Section are intended to supersede,
to
the extent permitted by law, any right to contribution under the Act, the
Exchange Act or otherwise available. The Underwriters’ obligations to contribute
pursuant to this Section 5.3 are several and not joint.
6.
Default
by an Underwriter
.
6.1.
Default
Not Exceeding 10% of Firm Units or Option Units
.
If any Underwriter or Underwriters shall default in its or their obligations
to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10%
of
the number of Firm Units or Option Units that all Underwriters have agreed
to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion
to
their respective commitments hereunder.
6.2.
Default
Exceeding 10% of Firm Units or Option Units
.
In the event that the default addressed in Section 6.1 above relates to more
than 10% of the Firm Units or Option Units, the Representative may, in its
discretion, arrange for the Representative or for another party or parties
to
purchase such Firm Units or Option Units to which such default relates on the
terms contained herein. If within one (1) Business Day after such default
relating to more than 10% of the Firm Units or Option Units the Representative
does not arrange for the purchase of such Firm Units or Option Units, then
the
Company shall be entitled to a further period of one (1) Business Day within
which to procure another party or parties satisfactory to the Representative
to
purchase said Firm Units or Option Units on such terms. In the event that
neither the Representative nor the Company arrange for the purchase of the
Firm
Units or Option Units to which a default relates as provided in this Section
6,
this Agreement may be terminated by the Representative or the Company without
liability on the part of the Company (except as provided in Sections 3.12 and
5
hereof) or the several Underwriters (except as provided in Section 5 hereof);
provided
,
however
,
that if such default occurs with respect to the Option Units, this Agreement
will not terminate as to the Firm Units; and
provided
further
that nothing herein shall relieve a defaulting Underwriter of its liability,
if
any, to the other several Underwriters and to the Company for damages occasioned
by its default hereunder.
Broadband
Capital Management LLC
6.3.
Postponement
of Closing Date
.
In the event that the Firm Units or Option Units to which the default relates
are to be purchased by the non-defaulting Underwriters, or are to be purchased
by another party or parties as aforesaid, the Representative or the Company
shall have the right to postpone the Closing Date or Option Closing Date for
a
reasonable period, but not in any event exceeding five (5) Business Days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement and/or the Prospectus, as the case may be, or in any
other documents and arrangements, and the Company agrees to file promptly any
amendment to, or to supplement, the Registration Statement and/or the
Prospectus, as the case may be, that in the opinion of counsel for the
Underwriters may thereby be made necessary. The term “Underwriter” as used in
this Agreement shall include any party substituted under this Section 6 with
like effect as if it had originally been a party to this Agreement with respect
to such Securities.
7.
Additional
Covenants
.
7.1.
Additional
Shares or Options
.
The Company hereby agrees that until the Company consummates a Business
Combination, it shall not issue any Ordinary Shares or any options or other
securities convertible into Ordinary Shares or any shares of Preferred Stock
which participate in any manner in the Trust Account or which vote as a class
with the Ordinary Shares on a Business Combination.
7.2.
Trust
Account Waiver Acknowledgments
.
The Company hereby agrees that it will not commence its due diligence
investigation of any operating business or businesses which the Company seeks
to
acquire (each, a “
Target
Business
”)
or obtain the services of any vendor unless and until such Target Business
or
vendor acknowledges in writing, whether through a letter of intent, memorandum
of understanding or other similar document (and subsequently acknowledges the
same in any definitive document replacing any of the foregoing), that (a) it
has
read the Prospectus and understands that the Company has established the Trust
Account, initially in an amount of $30,080,000 (without giving effect to any
exercise of the Over-allotment Option) for the benefit of the Public
Shareholders and that, except for a portion of the interest earned on the
amounts held in the Trust Account, the Company may disburse monies from the
Trust Account only: (i) to the Public Shareholders in the event of the
conversion of their shares or the dissolution and liquidation of the Trust
Account as part of the Company’s plan of dissolution and liquidation or (ii) to
the Company after it consummates a Business Combination and (b) for and in
consideration of the Company (1) agreeing to evaluate such Target Business
for
purposes of consummating a Business Combination with it or (2) agreeing to
engage the services of the vendor, as the case may be, such Target Business
or
vendor agrees that it does not have any right, title, interest or claim of
any
kind in or to any monies of the Trust Account (“
Claim
”)
and waives any Claim it may have in the future as a result of, or arising out
of, any negotiations, contracts or agreements with the Company and will not
seek
recourse against the Trust Account for any reason whatsoever. The foregoing
letters shall substantially be in the form attached hereto as
Exhibit
C
and
D
,
respectively.
Broadband
Capital Management LLC
7.3.
Insider
Letters
.
The Company shall not take any action or omit to take any action which would
cause a breach of any of the Insider Letters executed between each Company
Affiliate and Broadband and will not allow any amendments to, or waivers of,
such Insider Letters without the prior written consent of
Broadband.
7.4.
Amended
and Restated Memorandum and Articles of Association
.
The Company shall not take any action or omit to take any action that would
cause the Company to be in breach or violation of its Amended and Restated
Memorandum and Articles of Association or By-Laws. Except as set forth in
Section 3.31, prior to the consummation of a Business Combination, the Company
will not amend its Amended and Restated Memorandum and Articles of Association
or By-Laws without the prior written consent of Broadband.
7.5.
Proxy
and Other Information
.
The Company shall provide counsel to the Representative with ten copies of
all
proxy information and all related material filed with the Commission in
connection with a Business Combination concurrently with such filing with the
Commission. In addition, the Company shall furnish any other state in which
its
initial public offering was registered, such information as may be requested
by
such state.
7.6.
Acquisition/Liquidation
Procedure
.
7.6.1.
The
Company agrees: (i) that, prior to the consummation of any Business Combination,
it will submit such transaction to the Company’s shareholders for their approval
(“
Business
Combination Vote
”)
even if the nature of the acquisition is such as would not ordinarily require
shareholder approval under applicable state law; and (ii) that, in the event
that the Company does not effect a Business Combination by the termination
date
of the Company’s corporate existence (the
“Termination
Date
”),
the Company shall take all action necessary to dissolve the Company and
liquidate the Trust Account to holders of IPO Shares as soon as reasonably
practicable, subject to the requirements of the laws of the Cayman Islands.
Upon
liquidation of the Trust Account, the Company will distribute to all holders
of
IPO Shares (defined below) an aggregate sum equal to $7.76 per unit (plus any
remaining portion of the interest income earned on the Trust Account but net
of:
(i) taxes payable on interest income earned on the Trust Account; (ii) amounts
to be paid to any redeeming shareholders voting against the extended period;
and
(iii) amounts released to the Company, from time to time, to fund its working
capital and general corporate requirements (not to exceed $1,350,000) plus
a pro
rata share of any remaining net assets, subject to any valid claims by our
creditors that are not covered by amounts held in the Trust Account or the
indemnities provided by the Company’s directors and officers. Only holders of
IPO Shares (as defined below) shall be entitled to receive liquidating
distributions and the Company shall pay no liquidating distributions with
respect to any other shares of capital stock of the Company, including the
Placement Warrants. With respect to any vote for any plan of dissolution and
liquidation recommended by the Company’s Board of Directors, if any, the Company
shall use its reasonable best efforts to cause all of the Company Affiliates
to
vote the Ordinary Shares owned by them in favor of such plan of dissolution
and
liquidation.
Broadband
Capital Management LLC
7.6.2.
With
respect to the Business Combination Vote or any vote to extend the period of
time to consummate a Business Combination by an additional 12 months (the
“
Extended
Period
”),
the Company shall use its reasonable best efforts to cause all of the Initial
Shareholders to vote the Ordinary Shares owned by them immediately prior to
this
Offering in accordance with the majority of the IPO Shares. In addition, the
Company shall use its reasonable best efforts to cause the Initial Shareholders
to vote Ordinary Shares they acquire in the IPO or in the aftermarket in favor
of the Business Combination and in favor of the Extended Period. At the time
the
Company seeks approval of any potential Business Combination, the Company will
offer each of the holders of the Company’s Ordinary Shares issued in this
Offering (the “
IPO
Shares
”)
the right to convert their IPO Shares at a per share price equal to $7.76 (the
“
Redemption
Price
”).
If holders of up to one share less than 30.0% in interest of the Company’s IPO
Shares vote against such approval of a Business Combination, the Company may,
but will not be required to, proceed with such Business Combination. If the
Company elects to so proceed, it will redeem shares, based upon the Redemption
Price, from those holders of IPO Shares who affirmatively requested such
conversion and who voted against the Business Combination. If holders of 30.0%
or more in interest of the IPO Shares vote against approval of any potential
Business Combination and elect to redeem their IPO Shares, the Company will
not
proceed with such Business Combination and will not convert such shares. Only
holders of IPO Shares shall be entitled to receive liquidating distributions
and
the Company shall pay no liquidating distributions with respect to any other
shares of capital stock of the Company. In the event any of the holders of
the
IPO Shares exercise its right to convert its IPO Shares to cash, certain of
the
stockholders of the Company prior to the IPO have agreed pursuant to the Insider
Letters and the Escrow Agreement that, in order to partially offset the
resulting dilution to the non-converting holders of the IPO Shares, they shall
surrender to the Company, prior to the consummation of the Business Combination,
up to an aggregate of 124,736 of their shares of Ordinary Shares of the Company
(as described in the Prospectus) and the Company shall cause such stockholders
to surrender to the Company, prior to the consummation of the Business
Combination, such shares of Ordinary Stock.
7.7.
Rule
419
.
The Company agrees that it will use its best efforts to prevent the Company
from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including, but not limited to, using its best efforts
to
prevent any of the Company’s outstanding securities from being deemed to be a
“penny stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
7.8.
Presentation
of Potential Target Businesses
.
The Company shall cause each of the Company Affiliates to agree that, in order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the Company Affiliates will present to the Company for its
consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire an operating business, until the earlier of
the
consummation by the Company of a Business Combination, the liquidation of the
Company or until such time as the Company Affiliates cease to be affiliates
of
the Company, subject to any pre-existing fiduciary obligations the Company
Affiliates might have.
Broadband
Capital Management LLC
7.9.
Target
Net Assets
.
The Company agrees that the initial Target Business that it acquires must have
a
fair market value equal to at least 80.0% of the amount in the Trust Account
at
the time of such acquisition (exclusive of Broadband’s Contingent Discount held
in the Trust Account). The fair market value of such business must be determined
by the Board of Directors of the Company based upon standards generally accepted
by the financial community, such as actual and potential sales, earnings and
cash flow and book value. If the Board of Directors of the Company is not able
to independently determine that the Target Business has a fair market value
of
at least 80.0% of the amount in the Trust Account (exclusive of the Contingent
Discount held in the trust account) at the time of such acquisition, the Company
will obtain an opinion from an unaffiliated, independent investment banking
firm
which is a member of FINRA with respect to the satisfaction of such criteria.
The Company is not required to obtain an opinion from an investment banking
firm
as to the fair market value if the Company’s Board of Directors independently
determines that the Target Business does have sufficient fair market
value.
8.
Representations
and Agreements to Survive Delivery
.
Except as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at the Closing Date or the Option Closing Date, if
any, and such representations, warranties and agreements of the Underwriters
and
Company, including the indemnity agreements contained in Section 5 hereof,
shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any Underwriter, the Company or any controlling person,
and shall survive termination of this Agreement or the issuance and delivery
of
the Securities to the several Underwriters until the earlier of the expiration
of any applicable statute of limitations and the seventh (7th) anniversary
of
the later of the Closing Date or the Option Closing Date, if any, at which
time
the representations, warranties and agreements shall terminate and be of no
further force and effect.
9.
Effective
Date of This Agreement and Termination Thereof
.
9.1.
Effective
Date
.
This Agreement shall become effective on the Effective Date at the time the
Registration Statement is declared effective by the Commission.
9.2.
Termination
.
Broadband shall have the right to terminate this Agreement at any time prior
to
any Closing Date: (i) if any domestic or international event or act or
occurrence has materially disrupted or, in the Representative’s sole opinion,
will in the immediate future materially disrupt, general securities markets
in
the United States; or (ii) if trading on the New York Stock Exchange, the AMEX,
the Boston Stock Exchange or on the OTC Bulletin Board (or successor trading
market) shall have been suspended, or minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices for securities shall have
been fixed, or maximum ranges for prices for securities shall have been required
on the OTC Bulletin Board or by order of the Commission or any other government
authority having jurisdiction, or (iii) if the United States shall have become
involved in a war or an increase in major hostilities, or (iv) if a banking
moratorium has been declared by a New York State or federal authority, or (v)
if
a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities market, or (vi) if the Company
shall have sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether
or
not such loss shall have been insured, will, in the Representative’s sole
opinion, make it inadvisable to proceed with the delivery of the Units, or
(vii)
if any of the Company’s representations, warranties or covenants hereunder are
breached, or (viii) if the Representative shall have become aware after the
date
hereof of such a material adverse change in the conditions or prospects of
the
Company, or such adverse material change in general market conditions,
including, without limitation, as a result of terrorist activities after the
date hereof, as in the Representative’s judgment would make it impracticable to
proceed with the offering, sale and/or delivery of the Units or to enforce
contracts made by the Underwriters for the sale of the Units.
Broadband
Capital Management LLC
9.3.
Expenses
.
In the event that this Agreement shall not be carried out for any reason
whatsoever, within the time specified herein or any extensions thereof pursuant
to the terms herein, the obligations of the Company to pay the out of pocket
expenses related to the transactions contemplated herein shall be governed
by
Section 3.12.1 hereof.
9.4.
Indemnification
.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 shall not be
in
any way effected by, such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
10.
Miscellaneous
.
10.1.
Notices
.
All communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered by hand or reputable
overnight courier or delivered by facsimile transmission (with printed
confirmation of receipt) and confirmed and shall be deemed given when so mailed,
delivered or faxed (or if mailed, two days after such mailing):
If
to the Representative:
Broadband
Capital Management LLC
712
Fifth Avenue
New
York, New York 10019
Attn:
Corby
T. Hocker, Managing Director
Fax:
(212) 702-9830
Broadband
Capital Management LLC
With
a copy (which shall not constitute notice) to:
Ellenoff
Grossman & Schole LLP
370
Lexington Avenue, 19
th
Floor
New
York, New York 10017
Attn:
Douglas S. Ellenoff, Esq.
Fax:
(212) 370-7889
If
to the Company:
Hambrecht
Asia Acquisition Corp.
Ciro’s
Plaza
388
Nanjing Xi Lu
Floor
23, Room 2308
200003
Shanghai, China
Attn:
John Wang, Chief Executive Officer
Fax:
852-2877-2662
With
a copy (which shall not constitute notice) to:
Loeb
& Loeb LLP
345
Park Avenue
New
York, NY 10154-1895
Attn:
Mitchell S. Nussbaum, Esq.
Fax:
(212) 407-4990
10.2.
Headings
.
The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
10.3.
Amendment
.
This Agreement may only be amended by a written instrument executed by each
of
the parties hereto.
10.4.
Entire
Agreement
.
This Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
10.5.
Binding
Effect
.
This Agreement shall inure solely to the benefit of and shall be binding upon
the Representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have
or
be construed to have any legal or equitable right, remedy or claim under or
in
respect of or by virtue of this Agreement or any provisions herein
contained.
10.6.
Governing
Law, Venue, etc.
Broadband
Capital Management LLC
10.6.1.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to the conflict of laws
principles thereof. Each of the Representative and the Company (and any
individual signatory hereto): (i) agrees that any legal suit, action or
proceeding arising out of or relating to this agreement and/or the transactions
contemplated hereby shall be instituted exclusively in New York Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York, (ii) waives any objection which such party may have or
hereafter to the venue of any such suit, action or proceeding and (iii)
irrevocably and exclusively consents to the jurisdiction of the New York Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding.
10.6.2.
Each
of the Representative and the Company (and any individual signatory hereto)
further agrees to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in the New York Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon the
Company or any such individual mailed by certified mail to the Company’s address
shall be deemed in every respect effective service of process upon the Company
or any such individual in any such suit, action or proceeding, and service
of
process upon the Representative mailed by certified mail to the Representative’s
address shall be deemed in every respect effective service process upon the
Representative, in any such suit, action or proceeding.
10.6.3.
THE
COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON
BEHALF OF ITS EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION
WITH
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE
REGISTRATION STATEMENT AND THE PROSPECTUS.
10.6.4.
The
Company agrees that the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its reasonable attorneys’
fees and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
10.7.
Execution
in Counterparts
.
This Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto. Delivery of a signed counterpart of this Agreement by fax or email/.pdf
transmission shall constitute valid and sufficient delivery
thereof.
10.8.
Waiver,
etc.
The failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
Broadband
Capital Management LLC
10.9.
No
Fiduciary Relationship
.
The Company hereby acknowledges that the Underwriters are acting solely as
underwriters in connection with the offering of the Company's securities. The
Company further acknowledges that the Underwriters are acting pursuant to a
contractual relationship created solely by this Agreement entered into on an
arm's length basis and in no event do the parties intend that the Underwriters
act or be responsible as a fiduciary to the Company, its management,
shareholders, creditors or any other person in connection with any activity
that
the Underwriters may undertake or have undertaken in furtherance of the offering
of the Company's securities, either before or after the date hereof. The
Underwriters hereby expressly disclaim any fiduciary or similar obligations
to
the Company, either in connection with the transactions contemplated by this
Agreement or any matters leading up to such transactions, and the Company hereby
confirms its understanding and agreement to that effect. The Company and the
Underwriters agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any
opinions or views expressed by the Underwriters to the Company regarding such
transactions, including but not limited to any opinions or views with respect
to
the price or market for the Company's securities, do not constitute advice
or
recommendations to the Company. The Company hereby waives and releases, to
the
fullest extent permitted by law, any claims that the Company may have against
the Underwriters with respect to any breach or alleged breach of any fiduciary
or similar duty to the Company in connection with the transactions contemplated
by this Agreement or any matters leading up to such
transactions.
Broadband
Capital Management LLC
If
the foregoing correctly sets forth the understanding between the Underwriters
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between
us.
|
|
|
|
|
|
Very
Truly Yours,
HAMBRECHT
ASIA ACQUISITION CORP.
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title
|
Agreed
to and accepted
as
of the date first written above:
BROADBAND
CAPITAL MANAGEMENT LLC, as Representative
of
the several Underwriters
|
By:
|
|
|
|
|
Name:
T. Corby Hocker
Title:
Managing Director
|
|
[Signature
Page to Underwriting Agreement, dated
,
2008]
SCHEDULE
A
HAMBRECHT
ASIA ACQUISITION CORP.
4,000,000
Units
|
Underwriter
|
|
Number
of Firm Units
to
be Purchased
|
|
Broadband
Capital Management LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000,000
|
EXHIBIT
A
FORM
OF LOEB & LOEB LLP OPINION
EXHIBIT
B
FORM
OF CONYERS, DILL & PEARMAN OPINION
EXHIBIT
C
Form
of Target Business Letter
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2, New World Tower
18
Queens
Road Central
Hong
Kong
Gentlemen:
Reference
is made to the Final Prospectus of Hambrecht Asia Acquisition Corp. (the
“
Company
”),
dated _______________, 2008 (the “
Prospectus
”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We
have read the Prospectus and understand that the Company has established the
Trust Account, initially in an amount of at least $30,080,000 for the benefit
of
the Public Shareholders and the underwriters of the Company’s initial public
offering (the “
Underwriters
”)
and that, except for the interest earned on the amounts held in the Trust
Account, the Company may disburse monies from the Trust Account only: (i) to
the
Public Shareholders in the event of the redemption of their shares or the
dissolution and liquidation of the Company; or (ii) to the Company and the
Underwriters after it consummates a Business Combination.
For
and in consideration of the Company agreeing to evaluate the undersigned for
purposes of consummating a Business Combination with it, the undersigned hereby
agrees that it does not have any right, title, interest or claim of any kind
in
or to any monies in the Trust Account (each, a “
Claim
”)
and hereby waives any Claim it may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with the Company and will
not
seek recourse against the Trust Account for any reason whatsoever.
|
|
|
|
|
Print
Name of Target Business
|
|
|
|
|
|
|
|
|
|
|
|
Authorized
Signature of Target Business
|
EXHIBIT
D
Form
of Vendor Letter
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2, New World Tower
18
Queens
Road Central
Hong
Kong
Gentlemen:
Reference
is made to the Final Prospectus of Hambrecht Asia Acquisition Corp. (the
“
Company
”),
dated _______________, 2008 (the “
Prospectus
”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We
have read the Prospectus and understand that the Company has established the
Trust Account, initially in an amount of at least $30,080,000 for the benefit
of
the Public Shareholders and the underwriters of the Company’s initial public
offering (the “
Underwriters
”)
and that, except for the interest earned on the amounts held in the Trust
Account (which interest may, prior to the consummation of a business combination
or the Company’s liquidation, be released (i) to the Company to pay taxes it has
incurred, (ii) to redeeming shareholders voting against the extended period,
as
described in the Prospectus and (iii) to the Company, from time to time, to
fund
its working capital and general corporate requirements), the Company may
disburse monies from the Trust Account only: (i) to the Public Shareholders
in
the event of the redemption of their shares or the dissolution and liquidation
of the Company; or (ii) to the Company and the Underwriters after it consummates
a Business Combination.
For
and in consideration of the Company agreeing to use the services of the
undersigned, the undersigned hereby agrees that it does not have any right,
title, interest or claim of any kind in or to any monies in the Trust Account
(each, a “
Claim
”)
and hereby waives any Claim it may have in the future as a result of, or arising
out of, any services provided to the Company and will not seek recourse against
the Trust Account for any reason whatsoever.
|
|
|
|
|
Print
Name of Vendor
|
|
|
|
|
|
|
|
|
|
|
|
Authorized
Signature of Vendor
|
Exhibit
3.3
The
Companies Law (Revised)
Company
Limited by Shares
THE
AMENDED AND RESTATED
ARTICLES
OF ASSOCIATION
OF
HAMBRECHT
ASIA ACQUISITION CORP.
(Adopted
by way of a special resolution passed on [
·
])
I
N D
E X
|
SUBJECT
|
|
Article
No.
|
|
|
|
|
|
Table
A
|
|
1
|
|
Interpretation
|
|
2
|
|
Share
Capital
|
|
3
|
|
Alteration
Of Capital
|
|
4-7
|
|
Share
Rights
|
|
8-9
|
|
Variation
Of Rights
|
|
10-11
|
|
Shares
|
|
12-15
|
|
Share
Certificates
|
|
16-21
|
|
Lien
|
|
22-24
|
|
Calls
On Shares
|
|
25-33
|
|
Forfeiture
Of Shares
|
|
34-42
|
|
Register
Of Members
|
|
43-44
|
|
Record
Dates
|
|
45
|
|
Transfer
Of Shares
|
|
46-51
|
|
Transmission
Of Shares
|
|
52-54
|
|
Untraceable
Members
|
|
55
|
|
General
Meetings
|
|
56-58
|
|
Notice
Of General Meetings
|
|
59-60
|
|
Proceedings
At General Meetings
|
|
61-65
|
|
Voting
|
|
66-77
|
|
Proxies
|
|
78-83
|
|
Corporations
Acting By Representatives
|
|
84
|
|
No
Action By Written Resolutions Of Members
|
|
85
|
|
Board
Of Directors
|
|
86
|
|
Retirement
of Directors
|
|
87-88
|
|
Disqualification
Of Directors
|
|
89
|
|
Executive
Directors
|
|
90-91
|
|
[Intentionally
Omitted]
|
|
92-95
|
|
Directors’
Fees And Expenses
|
|
96-99
|
|
Directors’
Interests
|
|
100-103
|
|
General
Powers Of The Directors
|
|
104-109
|
|
Borrowing
Powers
|
|
110-113
|
|
Proceedings
Of The Directors
|
|
114-123
|
|
[Intentionally
Omitted]
|
|
124-126
|
|
Officers
|
|
127-130
|
|
Register
of Directors and Officers
|
|
131
|
|
Minutes
|
|
132
|
|
Seal
|
|
133
|
|
Authentication
Of Documents
|
|
134
|
|
Destruction
Of Documents
|
|
135
|
|
Dividends
And Other Payments
|
|
136-145
|
|
Reserves
|
|
146
|
|
Capitalization
|
|
147-148
|
|
Subscription
Rights Reserve
|
|
149
|
|
Accounting
Records
|
|
150-154
|
|
Audit
|
|
155-160
|
|
Notices
|
|
161-163
|
|
Signatures
|
|
164
|
|
Winding
Up
|
|
165-166
|
|
Indemnity
|
|
167
|
|
Amendment
To Memorandum and Articles of Association And Name of
Company
|
|
168
|
|
Information
|
|
169
|
|
Business
Combination
|
|
170
|
INTERPRETATION
TABLE
A
|
1.
|
The
regulations in Table A in the Schedule to the Companies Law (Revised)
do
not apply to the Company.
|
INTERPRETATION
|
2.
|
(1)
|
Certain
of the terms contained in these Articles that are listed in the first
column of the table below, unless the context otherwise requires,
shall
bear the meaning set opposite them respectively in the second
column.
|
|
WORD
|
|
MEANING
|
|
|
|
|
|
“Auditor”
|
|
the
independent auditor of the Company which shall be an internationally
recognized firm of independent accountants.
|
|
“Articles”
|
|
these
Articles in their present form or as supplemented or amended or
substituted from time to time.
|
|
“Board”
or “Directors”
|
|
the
board of directors of the Company or the directors present at a meeting
of
directors of the Company at which a quorum is present.
|
|
“capital”
|
|
the
share capital from time to time of the Company.
|
|
“clear
days”
|
|
in
relation to the period of a notice, that period excluding the day
when the
notice is given or deemed to be given and the day for which it is
given or
on which it is to take effect.
|
|
“clearing
house”
|
|
a
clearing house recognized by the laws of the jurisdiction in which
the
shares of the Company (or depositary receipts therefor) are listed
or
quoted on a stock exchange or interdealer quotation system in such
jurisdiction.
|
|
“Company”
|
|
Hambrecht
Asia Acquisition Corp.
|
|
“competent
regulatory
|
|
a
competent regulatory authority in the territory where
|
|
authority”
|
|
the
shares of the Company (or depositary receipts therefor) are listed
or
quoted on a stock exchange or interdealer quotation system in such
territory.
|
|
“debenture”
and
|
|
include
debenture stock and debenture stockholder
|
|
“debenture
holder”
|
|
respectively.
|
|
“Designated
Stock
Exchange”
|
|
the
OTC Bulletin Board or such other exchange or
interdealer
quotation system upon which the Company’s securities are listed or quoted.
|
|
“dollars”
and “$”
|
|
dollars,
the legal currency of the United States of America.
|
|
“Exchange
Act”
|
|
the
Securities Exchange Act of 1934, as amended.
|
|
“head
office”
|
|
such
office of the Company as the Directors may from time to time determine
to
be the principal office of the Company.
|
|
“Law”
|
|
The
Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised)
of the
Cayman Islands.
|
|
“Member”
|
|
a
duly registered holder from time to time of the shares in the capital
of
the Company.
|
|
“month”
|
|
a
calendar month.
|
|
“FINRA”
|
|
The
Financial Industry Regulatory Authority.
|
|
“NASD
Rules”
|
|
the
rules set forth in the NASD Manual as part of the FINRA
rulebook.
|
|
“Notice”
|
|
written
notice unless otherwise specifically stated and as further defined
in
these Articles.
|
|
“Office”
|
|
the
registered office of the Company for the time being.
|
|
“ordinary
resolution”
|
|
a
resolution shall be an ordinary resolution when it has been passed
by a
simple majority of votes cast by such Members as, being entitled
so to do,
vote in person or, in the case of any Member being a corporation,
by its
duly authorized representative or, where proxies are allowed, by
proxy at
a general meeting of which not less than ten (10) clear days’ Notice has
been duly given.
|
|
“paid
up”
|
|
paid
up or credited as paid up.
|
|
“Register”
|
|
the
principal register and where applicable, any branch register of Members
of
the Company to be maintained at such place within or outside the
Cayman
Islands as the Board shall determine from time to time.
|
|
“Registration
Office”
|
|
in
respect of any class of share capital such place as the Board may
from
time to time determine to keep a branch register of Members in respect
of
that class of share capital and where (except in cases where the
Board
otherwise directs) the transfers or other documents of title for
such
class of share capital are to be lodged for registration and are
to be
registered.
|
|
“SEC”
|
|
the
United States Securities and Exchange Commission.
|
|
“Seal”
|
|
common
seal or any one or more duplicate seals of the Company (including
a
securities seal) for use in the Cayman Islands or in any place outside
the
Cayman Islands.
|
|
“Secretary”
|
|
any
person, firm or corporation appointed by the Board to perform any
of the
duties of secretary of the Company and includes any assistant, deputy,
temporary or acting secretary.
|
|
“special
resolution”
|
|
a
resolution shall be a special resolution when it has been passed
by a
majority of not less than two-thirds of votes cast by such Members
as,
being entitled so to do, vote in person or, in the case of such Members
as
are corporations, by their respective duly authorized representative
or,
where proxies are allowed, by proxy at a general meeting of which
not less
than ten (10) clear days’ Notice, specifying (without prejudice to the
power contained in these Articles to amend the same) the intention
to
propose the resolution as a special resolution, has been duly given.
Provided that, except in the case of an annual general meeting, if
it is
so agreed by a majority in number of the Members having the right
to
attend and vote at any such meeting, being a majority together holding
not
less than ninety-five (95) percent in nominal value of the shares
giving
that right and in the case of an annual general meeting, if it is
so
agreed by all Members entitled to attend and vote thereat, a resolution
may be proposed and passed as a special resolution at a meeting of
which
less than ten (10) clear days’ Notice has been given, provided that where
a special resolution is proposed to approve an amendment to Article
170,
it shall only be passed with the approval of the holders of at least
80%
of all of the issued shares of the Company;
|
|
|
|
|
|
a
special resolution shall be effective for any purpose for which an
ordinary resolution is expressed to be required under any provision
of
these Articles or the Statutes.
|
|
|
|
“Statutes”
|
|
the
Law and every other law of the Legislature of the Cayman Islands
for the
time being in force applying to or affecting the Company, its Memorandum
of Association and/or these Articles.
|
|
“year”
|
|
a
calendar year.
|
|
|
(2)
|
In
these Articles, unless there be something within the subject or context
inconsistent with such
construction:
|
|
|
(a)
|
words
importing the singular include the plural and vice
versa;
|
|
|
(b)
|
words
importing a gender include both gender and the
neuter;
|
|
|
(c)
|
words
importing persons include companies, associations and bodies of persons
whether corporate or not;
|
|
|
(i)
|
“may”
shall be construed as permissive;
|
|
|
(ii)
|
“shall”
or “will” shall be construed as
imperative;
|
|
|
(e)
|
expressions
referring to writing shall, unless the contrary intention appears,
be
construed as including printing, lithography, photography and other
modes
of representing words or figures in a visible form, and including
where
the representation takes the form of electronic display, provided
that
both the mode of service of the relevant document or notice and the
Member’s election comply with all applicable Statutes, rules and
regulations;
|
|
|
(f)
|
references
to any law, ordinance, statute or statutory provision shall be interpreted
as relating to any statutory modification or re-enactment thereof
for the
time being in force;
|
|
|
(g)
|
save
as aforesaid words and expressions defined in the Statutes shall
bear the
same meanings in these Articles if not inconsistent with the subject
in
the context;
|
|
|
(h)
|
references
to a document being executed include references to it being executed
under
hand or under seal or by electronic signature or by any other method
and
references to a notice or document include a notice or document recorded
or stored in any digital, electronic, electrical, magnetic or other
retrievable form or medium and information in visible form whether
having
physical substance or not.
|
SHARE
CAPITAL
|
3.
|
(1)
|
The
share capital of the Company at the date on which these Articles
come into
effect shall be divided into shares of a par value of
$
0.0001
each.
|
|
|
(2)
|
Subject
to the Law, the Company’s Memorandum and Articles of Association and,
where applicable, the rules of the Designated Stock Exchange and/or
any
competent regulatory authority, any power of the Company to purchase
or
otherwise acquire its own shares shall be exercisable by the Board
in such
manner, upon such terms and subject to such conditions as it thinks
fit.
|
|
|
(3)
|
No
share shall be issued to bearer.
|
ALTERATION
OF CAPITAL
|
4.
|
The
Company may from time to time by ordinary resolution in accordance
with
the Law alter the conditions of its Memorandum of Association
to:
|
|
|
(a)
|
increase
its capital by such sum, to be divided into shares of such amounts,
as the
resolution shall prescribe;
|
|
|
(b)
|
consolidate
and divide all or any of its capital into shares of larger amount
than its
existing shares;
|
|
|
(c)
|
without
prejudice to the powers of the Board under Article 12, divide its
shares
into several classes and without prejudice to any special rights
previously conferred on the holders of existing shares attach thereto
respectively any preferential, deferred, qualified or special rights,
privileges, conditions or such restrictions which in the absence
of any
such determination by the Company in general meeting, as the Directors
may
determine provided always that, for the avoidance of doubt, where
a class
of shares has been authorized by the Company no resolution of the
Company
in general meeting is required for the issuance of shares of that
class
and the Directors may issue shares of that class and determine such
rights, privileges, conditions or restrictions attaching thereto
as
aforesaid, and further provided that where the Company issues shares
which
do not carry voting rights, the words “non-voting” shall appear in the
designation of such shares and where the equity capital includes
shares
with different voting rights, the designation of each class of shares,
other than those with the most favorable voting rights, must include
the
words “restricted voting” or “limited
voting”;
|
|
|
(d)
|
sub-divide
its shares, or any of them, into shares of smaller amount than is
fixed by
the Memorandum of Association (subject, nevertheless, to the Law),
and may
by such resolution determine that, as between the holders of the
shares
resulting from such sub-division, one or more of the shares may have
any
such preferred, deferred or other rights or be subject to any such
restrictions as compared with the other or others as the Company
has power
to attach to unissued or new
shares;
|
|
|
(e)
|
cancel
any shares which, at the date of the passing of the resolution, have
not
been taken, or agreed to be taken, by any person, and diminish the
amount
of its capital by the amount of the shares so cancelled or, in the
case of
shares, without par value, diminish the number of shares into which
its
capital is divided.
|
|
5.
|
The
Board may settle as it considers expedient any difficulty which arises
in
relation to any consolidation and division under the last preceding
Article and in particular but without prejudice to the generality
of the
foregoing may issue certificates in respect of fractions of shares
or
arrange for the sale of the shares representing fractions and the
distribution of the net proceeds of sale (after deduction of the
expenses
of such sale) in due proportion amongst the Members who would have
been
entitled to the fractions, and for this purpose the Board may authorize
some person to transfer the shares representing fractions to their
purchaser or resolve that such net proceeds be paid to the Company
for the
Company’s benefit. Such purchaser will not be bound to see to the
application of the purchase money nor will his title to the shares
be
affected by any irregularity or invalidity in the proceedings relating
to
the sale.
|
|
6.
|
The
Company may from time to time by special resolution, subject to any
confirmation or consent required by the Law, reduce its share capital
or
any capital redemption reserve or other undistributable reserve in
any
manner permitted by law.
|
|
7.
|
Except
so far as otherwise provided by the conditions of issue, or by these
Articles, any capital raised by the creation of new shares shall
be
treated as if it formed part of the original capital of the Company,
and
such shares shall be subject to the provisions contained in these
Articles
with reference to the payment of calls and installments, transfer
and
transmission, forfeiture, lien, cancellation, surrender, voting and
otherwise.
|
SHARE
RIGHTS
|
8.
|
Subject
to the provisions of the Law, the rules of the Designated Stock Exchange
and the Memorandum and Articles of Association and to any special
rights
conferred on the holders of any shares or class of shares, and without
prejudice to Article 12 hereof, any share in the Company (whether
forming
part of the present capital or not) may be issued with or have attached
thereto such rights or restrictions whether in regard to dividend,
voting,
return of capital or otherwise as the Board may determine, including
without limitation on terms that they may be, or at the option of
the
Company or the holder are, liable to be redeemed on such terms and
in such
manner, including out of capital, as the Board may deem
fit.
|
|
9.
|
Subject
to the Law, any preferred shares may be issued or converted into
shares
that, at a determinable date or at the option of the Company or the
holder
if so authorized by its Memorandum of Association, are liable to
be
redeemed on such terms and in such manner as the Company before the
issue
or conversion may by ordinary resolution of the Members determine.
Where
the Company purchases for redemption a redeemable share, purchases
not
made through the market or by tender shall be limited to a maximum
price
as may from time to time be determined by the Board, either generally
or
with regard to specific purchases. If purchases are by tender, tenders
shall comply with applicable laws.
|
VARIATION
OF RIGHTS
|
10.
|
Subject
to the Law and without prejudice to Article 8, all or any of the
special
rights for the time being attached to the shares or any class of
shares
may, unless otherwise provided by the terms of issue of the shares
of that
class, from time to time (whether or not the Company is being wound
up) be
varied, modified or abrogated with the sanction of a special resolution
passed at a separate general meeting of the holders of the shares
of that
class. To every such separate general meeting all the provisions
of these
Articles relating to general meetings of the Company shall, mutatis
mutandis, apply, but so that:
|
|
|
(a)
|
the
necessary quorum (whether at a separate general meeting or at its
adjourned meeting) shall be a person or persons (or in the case of
a
Member being a corporation, its duly authorized representative) together
holding or representing by proxy not less than one-third in nominal
value
of the issued shares of that class;
|
|
|
(b)
|
every
holder of shares of the class shall be entitled on a poll to one
vote for
every such share held by him; and
|
|
|
(c)
|
any
holder of shares of the class present in person or by proxy or authorized
representative may demand a poll.
|
|
11.
|
The
special rights conferred upon the holders of any shares or class
of shares
shall not, unless otherwise expressly provided in the rights attaching
to
or the terms of issue of such shares, be deemed to be varied, modified
or
abrogated by the creation or issue of further shares ranking pari
passu
therewith.
|
SHARES
|
12.
|
(1)
|
Subject
to the Law, these Articles and, where applicable, the rules of the
Designated Stock Exchange and without prejudice to any special rights
or
restrictions for the time being attached to any shares or any class
of
shares, the unissued shares of the Company (whether forming part
of the
original or any increased capital) shall be at the disposal of the
Board,
which may offer, allot, grant options over or otherwise dispose of
them to
such persons, at such times and for such consideration and upon such
terms
and conditions as the Board may in its absolute discretion determine
but
so that no shares shall be issued at a discount. In particular and
without
prejudice to the generality of the foregoing, t
he
Board is hereby empowered to authorize by resolution or resolutions
from
time to time the issuance of one or more classes or series of preferred
shares and to fix the designations, powers, preferences and relative,
participating, optional and other rights, if any, and the qualifications,
limitations and restrictions thereof, if any, including, without
limitation, the number of shares constituting each such class or
series,
dividend rights, conversion rights, redemption privileges, voting
powers,
full or limited or no voting powers, and liquidation preferences,
and to
increase or decrease the size of any such class or series (but not
below
the number of shares of any class or series of preferred shares then
outstanding) to the extent permitted by Law. Without limiting the
generality of the foregoing, the resolution or resolutions providing
for
the establishment of any class or series of preferred shares may,
to the
extent permitted by law, provide that such class or series shall
be
superior to, rank equally with or be
junior
to
the preferred shares of any other class or
series.
|
|
|
(2)
|
Neither
the Company nor the Board shall be obliged, when making or granting
any
allotment of, offer of, option over or disposal of shares, to make,
or
make available, any such allotment, offer, option or shares to Members
or
others with registered addresses in any particular territory or
territories being a territory or territories where, in the absence
of a
registration statement or other special formalities, this would or
might,
in the opinion of the Board, be unlawful or impracticable. Members
affected as a result of the foregoing sentence shall not be, or be
deemed
to be, a separate class of members for any purpose whatsoever.
Except
as otherwise expressly provided in the resolution or resolutions
providing
for the establishment of any class or series of preferred shares,
no vote
of the holders of preferred shares of or ordinary shares shall be
a
prerequisite to the issuance of any shares of any class or series
of the
preferred shares authorized by and complying with the conditions
of the
Memorandum and Articles of
Association.
|
|
|
(3)
|
The
Board may issue options, warrants or convertible securities or securities
of similar nature conferring the right upon the holders thereof to
subscribe for, purchase or receive any class of shares or securities
in
the capital of the Company on such terms as it may from time to time
determine.
|
|
13.
|
The
Company may in connection with the issue of any shares exercise all
powers
of paying commission and brokerage conferred or permitted by the
Law.
Subject to the Law, the commission may be satisfied by the payment
of cash
or by the allotment of fully or partly paid shares or partly in one
and
partly in the other.
|
|
14.
|
Except
as required by law, no person shall be recognized by the Company
as
holding any share upon any trust and the Company shall not be bound
by or
required in any way to recognize (even when having notice thereof)
any
equitable, contingent, future or partial interest in any share or
any
fractional part of a share or (except only as otherwise provided
by these
Articles or by law) any other rights in respect of any share except
an
absolute right to the entirety thereof in the registered
holder.
|
|
15.
|
Subject
to the Law and these Articles, the Board may at any time after the
allotment of shares but before any person has been entered in the
Register
as the holder, recognize a renunciation thereof by the allottee in
favor
of some other person and may accord to any allottee of a share a
right to
effect such renunciation upon and subject to such terms and conditions
as
the Board considers fit to impose.
|
SHARE
CERTIFICATES
|
16.
|
Every
share certificate shall be issued under the Seal or a facsimile thereof
and shall specify the number and class and distinguishing numbers
(if any)
of the shares to which it relates, and the amount paid up thereon
and may
otherwise be in such form as the Directors may from time to time
determine. No certificate shall be issued representing shares of
more than
one class. The Board may by resolution determine, either generally
or in
any particular case or cases, that any signatures on any such certificates
(or certificates in respect of other securities) need not be autographic
but may be affixed to such certificates by some mechanical means
or may be
printed thereon.
|
|
17.
|
(1)
|
In
the case of a share held jointly by several persons, the Company
shall not
be bound to issue more than one certificate therefor and delivery
of a
certificate to one of several joint holders shall be sufficient delivery
to all such holders.
|
|
|
(2)
|
Where
a share stands in the names of two or more persons, the person first
named
in the Register shall as regards service of notices and, subject
to the
provisions of these Articles, all or any other matters connected
with the
Company, except the transfer of the shares, be deemed the sole holder
thereof.
|
|
18.
|
Every
person whose name is entered, upon an allotment of shares, as a Member
in
the Register shall be entitled, without payment, to receive one
certificate for all such shares of any one class or several certificates
each for one or more of such shares of such class upon payment for
every
certificate after the first of such reasonable out-of-pocket expenses
as
the Board from time to time
determines.
|
|
19.
|
Share
certificates shall be issued within the relevant time limit as prescribed
by the Law or as the Designated Stock Exchange may from time to time
determine, whichever is the shorter, after allotment or, except in
the
case of a transfer which the Company is for the time being entitled
to
refuse to register and does not register, after lodgment of a transfer
with the Company.
|
|
20.
|
(1)
|
Upon
every transfer of shares the certificate held by the transferor shall
be
given up to be cancelled, and shall forthwith be cancelled accordingly,
and a new certificate shall be issued to the transferee in respect
of the
shares transferred to him at such fee as is provided in paragraph
(2) of
this Article. If any of the shares included in the certificate so
given up
shall be retained by the transferor a new certificate for the balance
shall be issued to him at the aforesaid fee payable by the transferor
to
the Company in respect thereof.
|
|
|
(2)
|
The
fee referred to in paragraph (1) above shall be an amount not exceeding
the relevant maximum amount as the Designated Stock Exchange may
from time
to time determine provided that the Board may at any time determine
a
lower amount for such fee.
|
|
21.
|
If
a share certificate shall be damaged or defaced or alleged to have
been
lost, stolen or destroyed a new certificate representing the same
shares
may be issued to the relevant Member upon request and on payment
of such
fee as the Company may determine and, subject to compliance with
such
terms (if any) as to evidence and indemnity and to payment of the
costs
and reasonable out-of-pocket expenses of the Company in investigating
such
evidence and preparing such indemnity as the Board may think fit
and, in
case of damage or defacement, on delivery of the old certificate
to the
Company provided always that where share warrants have been issued,
no new
share warrant shall be issued to replace one that has been lost unless
the
Board has determined that the original has been
destroyed.
|
LIEN
|
22.
|
The
Company shall have a first and paramount lien on every share (not
being a
fully paid share) for all moneys (whether presently payable or not)
called
or payable at a fixed time in respect of that share. The Company
shall
also have a first and paramount lien on every share (not being a
fully
paid share) registered in the name of a Member (whether or not jointly
with other Members) for all amounts of money presently payable by
such
Member or his estate to the Company whether the same shall have been
incurred before or after notice to the Company of any equitable or
other
interest of any person other than such member, and whether the period
for
the payment or discharge of the same shall have actually arrived
or not,
and notwithstanding that the same are joint debts or liabilities
of such
Member or his estate and any other person, whether a Member of the
Company
or not. The Company’s lien on a share shall extend to all dividends or
other moneys payable thereon or in respect thereof. The Board may
at any
time, generally or in any particular case, waive any lien that has
arisen
or declare any share exempt in whole or in part, from the provisions
of
this Article.
|
|
23.
|
Subject
to these Articles, the Company may sell in such manner as the Board
determines any share on which the Company has a lien, but no sale
shall be
made unless some sum in respect of which the lien exists is presently
payable, or the liability or engagement in respect of which such
lien
exists is liable to be presently fulfilled or discharged nor until
the
expiration of fourteen (14) clear days after a notice in writing,
stating
and demanding payment of the sum presently payable, or specifying
the
liability or engagement and demanding fulfillment or discharge thereof
and
giving notice of the intention to sell in default, has been served
on the
registered holder for the time being of the share or the person entitled
thereto by reason of his death or
bankruptcy.
|
|
24.
|
The
net proceeds of the sale shall be received by the Company and applied
in
or towards payment or discharge of the debt or liability in respect
of
which the lien exists, so far as the same is presently payable, and
any
residue shall (subject to a like lien for debts or liabilities not
presently payable as existed upon the share prior to the sale) be
paid to
the person entitled to the share at the time of the sale. To give
effect
to any such sale the Board may authorize some person to transfer
the
shares sold to the purchaser thereof. The purchaser shall be registered
as
the holder of the shares so transferred and he shall not be bound
to see
to the application of the purchase money, nor shall his title to
the
shares be affected by any irregularity or invalidity in the proceedings
relating to the sale.
|
CALLS
ON SHARES
|
25.
|
Subject
to these Articles and to the terms of allotment, the Board may from
time
to time make calls upon the Members in respect of any moneys unpaid
on
their shares (whether on account of the nominal value of the shares
or by
way of premium), and each Member shall (subject to being given at
least
fourteen (14) clear days’ Notice specifying the time and place of payment)
pay to the Company as required by such notice the amount called on
his
shares. A call may be extended, postponed or revoked in whole or
in part
as the Board determines but no member shall be entitled to any such
extension, postponement or revocation except as a matter of grace
and
favor.
|
|
26.
|
A
call shall be deemed to have been made at the time when the resolution
of
the Board authorizing the call was passed and may be made payable
either
in one lump sum or by installments.
|
|
27.
|
A
person upon whom a call is made shall remain liable for calls made
upon
him notwithstanding the subsequent transfer of the shares in respect
of
which the call was made. The joint holders of a share shall be jointly
and
severally liable to pay all calls and installments due in respect
thereof
or other moneys due in respect
thereof.
|
|
28.
|
If
a sum called in respect of a share is not paid before or on the day
appointed for payment thereof, the person from whom the sum is due
shall
pay interest on the amount unpaid from the day appointed for payment
thereof to the time of actual payment at such rate (not exceeding
twenty
percent (20%) per annum) as the Board may determine, but the Board
may in
its absolute discretion waive payment of such interest wholly or
in
part.
|
|
29.
|
No
Member shall be entitled to receive any dividend or bonus or to be
present
and vote (save as proxy for another Member) at any general meeting
either
personally or by proxy, or be reckoned in a quorum, or exercise any
other
privilege as a Member until all calls or installments due by him
to the
Company, whether alone or jointly with any other person, together
with
interest and expenses (if any) shall have been
paid.
|
|
30.
|
On
the trial or hearing of any action or other proceedings for the recovery
of any money due for any call, it shall be sufficient to prove that
the
name of the Member sued is entered in the Register as the holder,
or one
of the holders, of the shares in respect of which such debt accrued,
that
the resolution making the call is duly recorded in the minute book,
and
that notice of such call was duly given to the Member sued, in pursuance
of these Articles; and it shall not be necessary to prove the appointment
of the Directors who made such call, nor any other matters whatsoever,
but
the proof of the matters aforesaid shall be conclusive evidence of
the
debt.
|
|
31.
|
Any
amount payable in respect of a share upon allotment or at any fixed
date,
whether in respect of nominal value or premium or as an installment
of a
call, shall be deemed to be a call duly made and payable on the date
fixed
for payment and if it is not paid the provisions of these Articles
shall
apply as if that amount had become due and payable by virtue of a
call
duly made and notified.
|
|
32.
|
On
the issue of shares the Board may differentiate between the allottees
or
holders as to the amount of calls to be paid and the times of
payment.
|
|
33.
|
The
Board may, if it thinks fit, receive from any Member willing to advance
the same, and either in money or money’s worth, all or any part of the
moneys uncalled and unpaid or installments payable upon any shares
held by
him and upon all or any of the moneys so advanced (until the same
would,
but for such advance, become presently payable) pay interest at such
rate
(if any) as the Board may decide. The Board may at any time repay
the
amount so advanced upon giving to such Member not less than one month’s
Notice of its intention in that behalf, unless before the expiration
of
such notice the amount so advanced shall have been called up on the
shares
in respect of which it was advanced. Such payment in advance shall
not
entitle the holder of such share or shares to participate in respect
thereof in a dividend subsequently
declared.
|
FORFEITURE
OF SHARES
|
34.
|
(1)
|
If
a call remains unpaid after it has become due and payable the Board
may
give to the person from whom it is due not less than fourteen (14)
clear
days’ Notice:
|
|
|
(a)
|
requiring
payment of the amount unpaid together with any interest which may
have
accrued and which may still accrue up to the date of actual payment;
and
|
|
|
(b)
|
stating
that if the Notice is not complied with the shares on which the call
was
made will be liable to be
forfeited.
|
|
|
(2)
|
If
the requirements of any such Notice are not complied with, any share
in
respect of which such Notice has been given may at any time thereafter,
before payment of all calls and interest due in respect thereof has
been
made, be forfeited by a resolution of the Board to that effect, and
such
forfeiture shall include all dividends and bonuses declared in respect
of
the forfeited share but not actually paid before the
forfeiture.
|
|
35.
|
When
any share has been forfeited, notice of the forfeiture shall be served
upon the person who was before forfeiture the holder of the share.
No
forfeiture shall be invalidated by any omission or neglect to give
such
Notice.
|
|
36.
|
The
Board may accept the surrender of any share liable to be forfeited
hereunder and, in such case, references in these Articles to forfeiture
will include surrender.
|
|
37.
|
Any
share so forfeited shall be deemed the property of the Company and
may be
sold, re-allotted or otherwise disposed of to such person, upon such
terms
and in such manner as the Board determines, and at any time before
a sale,
re-allotment or disposition the forfeiture may be annulled by the
Board on
such terms as the Board determines.
|
|
38.
|
A
person whose shares have been forfeited shall cease to be a Member
in
respect of the forfeited shares but nevertheless shall remain liable
to
pay the Company all moneys which at the date of forfeiture were presently
payable by him to the Company in respect of the shares, with (if
the
Directors shall in their discretion so require) interest thereon
from the
date of forfeiture until payment at such rate (not exceeding twenty
percent (20%) per annum) as the Board determines. The Board may enforce
payment thereof if it thinks fit, and without any deduction or allowance
for the value of the forfeited shares, at the date of forfeiture,
but his
liability shall cease if and when the Company shall have received
payment
in full of all such moneys in respect of the shares. For the purposes
of
this Article any sum which, by the terms of issue of a share, is
payable
thereon at a fixed time which is subsequent to the date of forfeiture,
whether on account of the nominal value of the share or by way of
premium,
shall notwithstanding that time has not yet arrived be deemed to
be
payable at the date of forfeiture, and the same shall become due
and
payable immediately upon the forfeiture, but interest thereon shall
only
be payable in respect of any period between the said fixed time and
the
date of actual payment.
|
|
39.
|
A
declaration by a Director or the Secretary that a share has been
forfeited
on a specified date shall be conclusive evidence of the facts therein
stated as against all persons claiming to be entitled to the share,
and
such declaration shall (subject to the execution of an instrument
of
transfer by the Company if necessary) constitute a good title to
the
share, and the person to whom the share is disposed of shall be registered
as the holder of the share and shall not be bound to see to the
application of the consideration (if any), nor shall his title to
the
share be affected by any irregularity in or invalidity of the proceedings
in reference to the forfeiture, sale or disposal of the share. When
any
share shall have been forfeited, notice of the declaration shall
be given
to the Member in whose name it stood immediately prior to the forfeiture,
and an entry of the forfeiture, with the date thereof, shall forthwith
be
made in the register, but no forfeiture shall be in any manner invalidated
by any omission or neglect to give such notice or make any such
entry.
|
|
40.
|
Notwithstanding
any such forfeiture as aforesaid the Board may at any time, before
any
shares so forfeited shall have been sold, re-allotted or otherwise
disposed of, permit the shares forfeited to be bought back upon the
terms
of payment of all calls and interest due upon and expenses incurred
in
respect of the share, and upon such further terms (if any) as it
thinks
fit.
|
|
41.
|
The
forfeiture of a share shall not prejudice the right of the Company
to any
call already made or installment payable
thereon.
|
|
42.
|
The
provisions of these Articles as to forfeiture shall apply in the
case of
non-payment of any sum which, by the terms of issue of a share, becomes
payable at a fixed time, whether on account of the nominal value
of the
share or by way of premium, as if the same had been payable by virtue
of a
call duly made and notified.
|
REGISTER
OF MEMBERS
|
43.
|
(1)
|
The
Company shall keep in one or more books a Register of its Members
and
shall enter therein the following particulars, that is to
say:
|
|
|
(a)
|
the
name and address of each Member, the number and class of shares held
by
him and the amount paid or agreed to be considered as paid on such
shares;
|
|
|
(b)
|
the
date on which each person was entered in the Register;
and
|
|
|
(c)
|
the
date on which any person ceased to be a
Member.
|
|
|
(2)
|
The
Company may keep an overseas or local or other branch register of
Members
resident in any place, and the Board may make and vary such regulations
as
it determines in respect of the keeping of any such register and
maintaining a Registration Office in connection
therewith.
|
|
44.
|
The
Register and branch register of Members, as the case may be, shall
be open
to inspection for such times and on such days as the Board shall
determine
by Members without charge or by any other person, upon a maximum
payment
of $2.50 or such other sum specified by the Board, at the Office
or such
other place at which the Register is kept in accordance with the
Law or,
if appropriate, upon a maximum payment of $1.00 or such other sum
specified by the Board at the Registration Office. The Register including
any overseas or local or other branch register of Members may, after
notice has been given by advertisement in an appointed newspaper
or any
other newspapers in accordance with the requirements of the Designated
Stock Exchange or by any electronic means in such manner as may be
accepted by the Designated Stock Exchange to that effect, be closed
at
such times or for such periods not exceeding in the whole thirty
(30) days
in each year as the Board may determine and either generally or in
respect
of any class of shares.
|
RECORD
DATES
|
45.
|
For
the purpose of determining the Members entitled to notice of or to
vote at
any general meeting, or any adjournment thereof, or entitled to express
consent to corporate action in writing without a meeting, or entitled
to
receive payment of any dividend or other distribution or allotment
of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of shares or for the purpose of any other
lawful
action, the Board may fix, in advance, a date as the record date
for any
such determination of Members, which date shall not be more than
sixty
(60) days nor less than ten (10) days before the date of such meeting,
nor
more than sixty (60) days prior to any other such
action.
|
|
|
If
the Board does not fix a record date for any general meeting, the
record
date for determining the Members entitled to a notice of or to vote
at
such meeting shall be at the close of business on the day next preceding
the day on which notice is given, or, if in accordance with these
Articles
notice is waived, at the close of business on the day next preceding
the
day on which the meeting is held. If corporate action without a general
meeting is to be taken, the record date for determining the Members
entitled to express consent to such corporate action in writing,
when no
prior action by the Board is necessary, shall be the first date on
which a
signed written consent setting forth the action taken or proposed
to be
taken is delivered to the Company by delivery to its head office.
The
record date for determining the Members for any other purpose shall
be at
the close of business on the day on which the Board adopts the resolution
relating thereto.
|
|
|
A
determination of the Members of record entitled to notice of or to
vote at
a meeting of the Members shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the
adjourned meeting.
|
TRANSFER
OF SHARES
|
46.
|
Subject
to these Articles, any Member may transfer all or any of his shares
by an
instrument of transfer in the usual or common form or in a form prescribed
by the Designated Stock Exchange or in any other form approved by
the
Board and may be under hand or, if the transferor or transferee is
a
clearing house or its nominee(s), by hand or by machine imprinted
signature or by such other manner of execution as the Board may approve
from time to time.
|
|
47.
|
The
instrument of transfer shall be executed by or on behalf of the transferor
and the transferee provided that the Board may dispense with the
execution
of the instrument of transfer by the transferee in any case which
it
thinks fit in its discretion to do so. Without prejudice to the last
preceding Article, the Board may also resolve, either generally or
in any
particular case, upon request by either the transferor or transferee,
to
accept mechanically executed transfers. The transferor shall be deemed
to
remain the holder of the share until the name of the transferee is
entered
in the Register in respect thereof. Nothing in these Articles shall
preclude the Board from recognizing a renunciation of the allotment
or
provisional allotment of any share by the allottee in favor of some
other
person.
|
|
48.
|
(1)
|
The
Board may, in its absolute discretion, and without giving any reason
therefor, refuse to register a transfer of any share (not being a
fully
paid up share) to a person of whom it does not approve, or any share
issued under any share incentive scheme for employees upon which
a
restriction on transfer imposed thereby still subsists, and it may
also,
without prejudice to the foregoing generality, refuse to register
a
transfer of any share to more than four joint holders or a transfer
of any
share (not being a fully paid up share) on which the Company has
a
lien.
|
|
|
(2)
|
The
Board in so far as permitted by any applicable law may, in its absolute
discretion, at any time and from time to time transfer any share
upon the
Register to any branch register or any share on any branch register
to the
Register or any other branch register. In the event of any such transfer,
the shareholder requesting such transfer shall bear the cost of effecting
the transfer unless the Board otherwise
determines.
|
|
|
(3)
|
Unless
the Board otherwise agrees (which agreement may be on such terms
and
subject to such conditions as the Board in its absolute discretion
may
from time to time determine, and which agreement the Board shall,
without
giving any reason therefor, be entitled in its absolute discretion
to give
or withhold), no shares upon the Register shall be transferred to
any
branch register nor shall shares on any branch register be transferred
to
the Register or any other branch register and all transfers and other
documents of title shall be lodged for registration, and registered,
in
the case of any shares on a branch register, at the relevant Registration
Office, and, in the case of any shares on the Register, at the Office
or
such other place at which the Register is kept in accordance with
the
Law.
|
|
49.
|
Without
limiting the generality of the last preceding Article, the Board
may
decline to recognize any instrument of transfer
unless:-
|
|
|
(a)
|
a
fee of such maximum sum as the Designated Stock Exchange may determine
to
be payable or such lesser sum as the Board may from time to time
require
is paid to the Company in respect
thereof;
|
|
|
(b)
|
the
instrument of transfer is in respect of only one class of
share;
|
|
|
(c)
|
the
instrument of transfer is lodged at the Office or such other place
at
which the Register is kept in accordance with the Law or the Registration
Office (as the case may be) accompanied by the relevant share
certificate(s) and such other evidence as the Board may reasonably
require
to show the right of the transferor to make the transfer (and, if
the
instrument of transfer is executed by some other person on his behalf,
the
authority of that person so to do);
and
|
|
|
(d)
|
if
applicable, the instrument of transfer is duly and properly
stamped.
|
|
50.
|
If
the Board refuses to register a transfer of any share, it shall,
within
two months after the date on which the transfer was lodged with the
Company, send to each of the transferor and transferee notice of
the
refusal.
|
|
51.
|
The
registration of transfers of shares or of any class of shares may,
after
notice has been given by advertisement in an appointed newspaper
or any
other newspapers or by any other means in accordance with the requirements
of the Designated Stock Exchange to that effect be suspended at such
times
and for such periods (not exceeding in the whole thirty (30) days
in any
year) as the Board may determine.
|
TRANSMISSION
OF SHARES
|
52.
|
If
a Member dies, the survivor or survivors where the deceased was a
joint
holder, and his legal personal representatives where he was a sole
or only
surviving holder, will be the only persons recognized by the Company
as
having any title to his interest in the shares; but nothing in this
Article will release the estate of a deceased Member (whether sole
or
joint) from any liability in respect of any share which had been
solely or
jointly held by him.
|
|
53.
|
Any
person becoming entitled to a share in consequence of the death or
bankruptcy or winding-up of a Member may, upon such evidence as to
his
title being produced as may be required by the Board, elect either
to
become the holder of the share or to have some person nominated by
him
registered as the transferee thereof. If he elects to become the
holder he
shall notify the Company in writing either at the Registration Office
or
Office, as the case may be, to that effect. If he elects to have
another
person registered he shall execute a transfer of the share in favor
of
that person. The provisions of these Articles relating to the transfer
and
registration of transfers of shares shall apply to such notice or
transfer
as aforesaid as if the death or bankruptcy of the Member had not
occurred
and the notice or transfer were a transfer signed by such
Member.
|
|
54.
|
A
person becoming entitled to a share by reason of the death or bankruptcy
or winding-up of a Member shall be entitled to the same dividends
and
other advantages to which he would be entitled if he were the registered
holder of the share. However, the Board may, if it thinks fit, withhold
the payment of any dividend payable or other advantages in respect
of such
share until such person shall become the registered holder of the
share or
shall have effectually transferred such share, but, subject to the
requirements of Article 75(2) being met, such a person may vote at
meetings.
|
UNTRACEABLE
MEMBERS
|
55.
|
(1)
|
Without
prejudice to the rights of the Company under paragraph (2) of this
Article, the Company may cease sending checks for dividend entitlements
or
dividend warrants by post if such checks or warrants have been left
uncashed on two consecutive occasions. However, the Company may exercise
the power to cease sending checks for dividend entitlements or dividend
warrants after the first occasion on which such a check or warrant
is
returned undelivered.
|
|
|
(2)
|
The
Company shall have the power to sell, in such manner as the Board
thinks
fit, any shares of a Member who is untraceable, but no such sale
shall be
made unless:
|
|
|
(a)
|
all
checks or warrants in respect of dividends of the shares in question,
being not less than three in total number, for any sum payable in
cash to
the holder of such shares in respect of them sent during the relevant
period in the manner authorized by the Articles of the Company have
remained uncashed;
|
|
|
(b)
|
so
far as it is aware at the end of the relevant period, the Company
has not
at any time during the relevant period received any indication of
the
existence of the Member who is the holder of such shares or of a
person
entitled to such shares by death, bankruptcy or operation of law;
and
|
|
|
(c)
|
the
Company, if so required by the rules governing the listing of shares
on
the Designated Stock Exchange, has given notice to, and caused
advertisement in newspapers to be made in accordance with the requirements
of, the Designated Stock Exchange of its intention to sell such shares
in
the manner required by the Designated Stock Exchange, and a period
of
three months or such shorter period as may be allowed by the Designated
Stock Exchange has elapsed since the date of such
advertisement.
|
|
|
|
For
the purpose of the foregoing, the “relevant period” means the period
commencing twelve (12) years before the date of publication of the
advertisement referred to in paragraph (c) of this Article and ending
at
the expiry of the period referred to in that
paragraph.
|
|
|
(3)
|
To
give effect to any such sale the Board may authorize some person
to
transfer the said shares and an instrument of transfer signed or
otherwise
executed by or on behalf of such person shall be as effective as
if it had
been executed by the registered holder or the person entitled by
transmission to such shares, and the purchaser shall not be bound
to see
to the application of the purchase money nor shall his title to the
shares
be affected by any irregularity or invalidity in the proceedings
relating
to the sale. The net proceeds of the sale will belong to the Company
and
upon receipt by the Company of such net proceeds it shall become
indebted
to the former Member for an amount equal to such net proceeds. No
trust
shall be created in respect of such debt and no interest shall be
payable
in respect of it and the Company shall not be required to account
for any
money earned from the net proceeds which may be employed in the business
of the Company or as it thinks fit. Any sale under this Article shall
be
valid and effective notwithstanding that the Member holding the shares
sold is dead, bankrupt or otherwise under any legal disability or
incapacity.
|
GENERAL
MEETINGS
|
56.
|
An
annual general meeting of the Company shall be held in each year
other
than the year of the Company’s incorporation at such time and place as may
be determined by the Board.
|
|
57.
|
Each
general meeting, other than an annual general meeting, shall be called
an
extraordinary general meeting. General meetings may be held at such
times
and in any location in the world as may be determined by the
Board.
|
|
58.
|
Only
a majority of the Board or the Chairman or the Chief Executive Officer
of
the Board may call extraordinary general meetings, which extraordinary
general meetings shall be held at such times and locations (as permitted
hereby) as such person or persons shall
determine.
|
NOTICE
OF GENERAL MEETINGS
|
59.
|
(1)
|
An
annual general meeting and any extraordinary general meeting may
be called
by not less than ten (10) clear days’ Notice but a general meeting may be
called by shorter notice, subject to the Law, if it is so
agreed:
|
|
|
(a)
|
in
the case of a meeting called as an annual general meeting, by all
the
Members entitled to attend and vote thereat; and
|
|
|
(b)
|
in
the case of any other meeting, by a majority in number of the Members
having the right to attend and vote at the meeting, being a majority
together holding not less than ninety-five percent (95%) in nominal
value
of the issued shares giving that
right.
|
|
|
(2)
|
The
notice shall specify the time and place of the meeting and, in case
of
special business, the general nature of the business. The notice
convening
an annual general meeting shall specify the meeting as such. Notice of
every general meeting shall be given to all Members other than to
such
Members as, under the provisions of these Articles or the terms of
issue
of the shares they hold, are not entitled to receive such notices
from the
Company, to all persons entitled to a share in consequence of the
death or
bankruptcy or winding-up of a Member and to each of the Directors
and the
Auditors.
|
|
|
(3)
|
Members
may seek to bring business (other than the nomination of candidates
for
election as directors) before an annual general meeting, provided
they
must provide timely notice of their intent in writing to the Company.
To
be timely, a Member’s notice will need to be delivered to the principal
executive offices of the Company not later than the close of business
on
the 90th day nor earlier than the close of business on the 120th
day prior
to the first anniversary of the preceding year’s annual general meeting.
For the first annual general meeting after the closing of the IPO
(as
defined in Article 170), a Member’s notice shall be timely if delivered to
the principal executive offices of the Company not later than the
90th day
prior to the scheduled date of the annual general meeting or the
10th day
following the day on which public announcement or Notice of the date
of
the annual general meeting is first made or sent by the
Company.
|
|
60.
|
The
accidental omission to give Notice of a meeting or (in cases where
instruments of proxy are sent out with the Notice) to send such instrument
of proxy to, or the non-receipt of such Notice or such instrument
of proxy
by, any person entitled to receive such Notice shall not invalidate
any
resolution passed or the proceedings at that
meeting.
|
PROCEEDINGS
AT GENERAL MEETINGS
|
61.
|
(1)
|
All
business shall be deemed special that is transacted at an extraordinary
general meeting, and also all business that is transacted at an annual
general meeting, with the exception
of:
|
|
|
(a)
|
the
declaration and sanctioning of
dividends;
|
|
|
(b)
|
consideration
and adoption of the accounts and balance sheet and the reports of
the
Directors and Auditors and other documents required to be annexed
to the
balance sheet;
|
|
|
(c)
|
the
election of Directors;
|
|
|
(d)
|
appointment
of Auditors (where special notice of the intention for such appointment
is
not required by the Law) and other
officers;
|
|
|
(e)
|
the
fixing of the remuneration of the Auditors, and the voting of remuneration
or extra remuneration to the
Directors;
|
|
|
(f)
|
the
granting of any mandate or authority to the Directors to offer, allot,
grant options over or otherwise dispose of the unissued shares in
the
capital of the Company representing not more than 20 percent (20%)
in
nominal value of its existing issued share capital;
and
|
|
|
(g)
|
the
granting of any mandate or authority to the Directors to repurchase
securities of the Company.
|
|
|
(2)
|
No
business other than the appointment of a chairman of a meeting shall
be
transacted at any general meeting unless a quorum is present at the
commencement of the business. At any general meeting of the Company,
two
(2) Members entitled to vote and present in person or by proxy or
(in the
case of a Member being a corporation) by its duly authorized
representative representing not less than one-third in nominal value
of
the total issued voting shares in the Company throughout the meeting
shall
form a quorum for all purposes.
|
|
62.
|
If
within thirty (30) minutes (or such longer time not exceeding one
hour as
the chairman of the meeting may determine to wait) after the time
appointed for the meeting a quorum is not present, the meeting shall
stand
adjourned to the same day in the next week at the same time and place
or
to such time and place as the Board may determine. If at such adjourned
meeting a quorum is not present within half an hour from the time
appointed for holding the meeting, the meeting shall be
dissolved.
|
|
63.
|
The
chairman of the Company shall preside as chairman at every general
meeting. If at any meeting the chairman is not present within fifteen
(15)
minutes after the time appointed for holding the meeting, or is not
willing to act as chairman, the Directors present shall choose one
of
their number to act, or if one Director only is present he shall
preside
as chairman if willing to act. If no Director is present, or if each
of
the Directors present declines to take the chair, or if the chairman
chosen shall retire from the chair, the Members present in person
or by
proxy and entitled to vote shall elect one of their number to be
chairman.
|
|
64.
|
The
chairman may adjourn the meeting from time to time and from place
to
place, but no business shall be transacted at any adjourned meeting
other
than the business which might lawfully have been transacted at the
meeting
had the adjournment not taken place. When a meeting is adjourned
for
fourteen (14) days or more, at least seven (7) clear days’ notice of the
adjourned meeting shall be given specifying the time and place of
the
adjourned meeting but it shall not be necessary to specify in such
notice
the nature of the business to be transacted at the adjourned meeting
and
the general nature of the business to be transacted. Save as aforesaid,
it
shall be unnecessary to give notice of an
adjournment.
|
|
65.
|
If
an amendment is proposed to any resolution under consideration but
is in
good faith ruled out of order by the chairman of the meeting, the
proceedings on the substantive resolution shall not be invalidated
by any
error in such ruling. In the case of a resolution duly proposed as
a
special resolution, no amendment thereto (other than a mere clerical
amendment to correct a patent error) may in any event be considered
or
voted upon.
|
VOTING
|
66.
|
Subject
to any special rights or restrictions as to voting for the time being
attached to any shares by or in accordance with these Articles, at
any
general meeting on a show of hands every Member present in person
(or
being a corporation, is present by a duly authorized representative),
or
by proxy shall have one vote and on a poll every Member present in
person
or by proxy or, in the case of a Member being a corporation, by its
duly
authorized representative shall have one vote for every fully paid
share
of which he is the holder but so that no amount paid up or credited
as
paid up on a share in advance of calls or installments is treated
for the
foregoing purposes as paid up on the share. Notwithstanding anything
contained in these Articles, where more than one proxy is appointed
by a
Member which is a clearing house (or its nominee(s)), each such proxy
shall have one vote on a show of hands. A resolution put to the vote
of a
meeting shall be decided on a show of hands unless voting by way
of a poll
is required by he rules of the Designated Stock Exchange or (before
or on
the declaration of the result of the show of hands or on the withdrawal
of
any other demand for a poll) a poll is
demanded:
|
|
|
(a)
|
by
the chairman of such meeting; or
|
|
|
(b)
|
by
at least three Members present in person or in the case of a Member
being
a corporation by its duly authorized representative or by proxy for
the
time being entitled to vote at the meeting;
or
|
|
|
(c)
|
by
a Member or Members present in person or in the case of a Member
being a
corporation by its duly authorized representative or by proxy and
representing not less than one-tenth of the total voting rights of
all
Members having the right to vote at the meeting;
or
|
|
|
(d)
|
by
a Member or Members present in person or in the case of a Member
being a
corporation by its duly authorized representative or by proxy and
holding
shares in the Company conferring a right to vote at the meeting being
shares on which an aggregate sum has been paid up equal to not less
than
one-tenth of the total sum paid up on all shares conferring that
right.
|
|
|
A
demand by a person as proxy for a Member or in the case of a Member
being
a corporation by its duly authorized representative shall be deemed
to be
the same as a demand by a
Member.
|
|
67.
|
Unless
a poll is duly demanded and the demand is not withdrawn, a declaration
by
the chairman that a resolution has been carried, or carried unanimously,
or by a particular majority, or not carried by a particular majority,
or
lost, and an entry to that effect made in the minute book of the
Company,
shall be conclusive evidence of the facts without proof of the number
or
proportion of the votes recorded for or against the
resolution.
|
|
68.
|
If
a poll is duly demanded the result of the poll shall be deemed to
be the
resolution of the meeting at which the poll was demanded. The Company
shall only be required to disclose the voting figures on a poll if
such
disclosure is required by the rules of the Designated Stock
Exchange.
|
|
69.
|
A
poll demanded on the election of a chairman, or on a question of
adjournment, shall be taken forthwith. A poll demanded on any other
question shall be taken in such manner (including the use of ballot
or
voting papers or tickets) and either forthwith or at such time (being
not
later than thirty (30) days after the date of the demand) and place
as the
chairman directs. It shall not be necessary (unless the chairman
otherwise
directs) for notice to be given of a poll not taken
immediately.
|
|
70.
|
The
demand for a poll shall not prevent the continuance of a meeting
or the
transaction of any business other than the question on which the
poll has
been demanded, and, with the consent of the chairman, it may be withdrawn
at any time before the close of the meeting or the taking of the
poll,
whichever is the earlier.
|
|
71.
|
On
a poll votes may be given either personally or by
proxy.
|
|
72.
|
A
person entitled to more than one vote on a poll need not use all
his votes
or cast all the votes he uses in the same
way.
|
|
73.
|
All
questions submitted to a meeting shall be decided by a simple majority
of
votes except where a greater majority is required by these Articles
or by
the Law. In the case of an equality of votes, whether on a show of
hands
or on a poll, the chairman of such meeting shall not be entitled
to a
second or casting vote and the resolution shall
fail.
|
|
74.
|
Where
there are joint holders of any share any one of such joint holder
may
vote, either in person or by proxy, in respect of such share as if
he were
solely entitled thereto, but if more than one of such joint holders
be
present at any meeting the vote of the senior who tenders a vote,
whether
in person or by proxy, shall be accepted to the exclusion of the
votes of
the other joint holders, and for this purpose seniority shall be
determined by the order in which the names stand in the Register
in
respect of the joint holding. Several executors or administrators
of a
deceased Member in whose name any share stands shall for the purposes
of
this Article be deemed joint holders
thereof.
|
|
75.
|
(1)
|
A
Member who is a patient for any purpose relating to mental health
or in
respect of whom an order has been made by any court having jurisdiction
for the protection or management of the affairs of persons incapable
of
managing their own affairs may vote, whether on a show of hands or
on a
poll, by his receiver, committee, curator bonis or other person in
the
nature of a receiver, committee or curator bonis appointed by such
court,
and such receiver, committee, curator bonis or other person may vote
on a
poll by proxy, and may otherwise act and be treated as if he were
the
registered holder of such shares for the purposes of general meetings,
provided that such evidence as the Board may require of the authority
of
the person claiming to vote shall have been deposited at the Office,
head
office or Registration Office, as appropriate, not less than forty-eight
(48) hours before the time appointed for holding the meeting, or
adjourned
meeting or poll, as the case may
be.
|
|
|
(2)
|
Any
person entitled under Article 53 to be registered as the holder of
any
shares may vote at any general meeting in respect thereof in the
same
manner as if he were the registered holder of such shares, provided
that
forty-eight (48) hours at least before the time of
the
holding of the meeting or adjourned meeting, as the case may be,
at which
he proposes to vote, he shall satisfy the Board of his entitlement
to such
shares, or the Board shall have previously admitted his right to
vote at
such meeting in respect thereof.
|
|
76.
|
No
Member shall, unless the Board otherwise determines, be entitled
to attend
and vote and to be reckoned in a quorum at any general meeting unless
he
is duly registered and all calls or other sums presently payable
by him in
respect of shares in the Company have been
paid.
|
|
|
(a)
|
any
objection shall be raised to the qualification of any voter;
or
|
|
|
(b)
|
any
votes have been counted which ought not to have been counted or which
might have been rejected; or
|
|
|
(c)
|
any
votes are not counted which ought to have been
counted;
|
|
|
the
objection or error shall not vitiate the decision of the meeting
or
adjourned meeting on any resolution unless the same is raised or
pointed
out at the meeting or, as the case may be, the adjourned meeting
at which
the vote objected to is given or tendered or at which the error occurs.
Any objection or error shall be referred to the chairman of the meeting
and shall only vitiate the decision of the meeting on any resolution
if
the chairman decides that the same may have affected the decision
of the
meeting. The decision of the chairman on such matters shall be final
and
conclusive.
|
PROXIES
|
78.
|
Any
Member entitled to attend and vote at a meeting of the Company shall
be
entitled to appoint another person as his proxy to attend and vote
instead
of him. A Member who is the holder of two or more shares may appoint
more
than one proxy to represent him and vote on his behalf at a general
meeting of the Company or at a class meeting. A proxy need not be
a
Member. In addition, a proxy or proxies representing either a Member
who
is an individual or a Member which is a corporation shall be entitled
to
exercise the same powers on behalf of the Member which he or they
represent as such Member could
exercise.
|
|
79.
|
The
instrument appointing a proxy shall be in writing under the hand
of the
appointor or of his attorney duly authorized in writing or, if the
appointor is a corporation, either under its seal or under the hand
of an
officer, attorney or other person authorized to sign the same. In
the case
of an instrument of proxy purporting to be signed on behalf of a
corporation by an officer thereof it shall be assumed, unless the
contrary
appears, that such officer was duly authorized to sign such instrument
of
proxy on behalf of the corporation without further evidence of the
facts.
|
|
80.
|
The
instrument appointing a proxy and (if required by the Board) the
power of
attorney or other authority (if any) under which it is signed, or
a
certified copy of such power or authority, shall be delivered to
such
place or one of such places (if any) as may be specified for that
purpose
in or by way of note to or in any document accompanying the notice
convening the meeting (or, if no place is so specified at the Registration
Office or the Office, as may be appropriate) not less than forty-eight
(48) hours before the time appointed for holding the meeting or adjourned
meeting at which the person named in the instrument proposes to vote
or,
in the case of a poll taken subsequently to the date of a meeting
or
adjourned meeting, not less than twenty-four (24) hours before the
time
appointed for the taking of the poll and in default the instrument
of
proxy shall not be treated as valid. No instrument appointing a proxy
shall be valid after the expiration of twelve (12) months from the
date
named in it as the date of its execution, except at an adjourned
meeting
or on a poll demanded at a meeting or an adjourned meeting in cases
where
the meeting was originally held within twelve (12) months from such
date.
Delivery of an instrument appointing a proxy shall not preclude a
Member
from attending and voting in person at the meeting convened and in
such
event, the instrument appointing a proxy shall be deemed to be
revoked.
|
|
81.
|
Instruments
of proxy shall be in any common form or in such other form as the
Board
may approve (provided that this shall not preclude the use of the
two-way
form) and the Board may, if it thinks fit, send out with the notice
of any
meeting forms of instrument of proxy for use at the meeting. The
instrument of proxy shall be deemed to confer authority to demand
or join
in demanding a poll and to vote on any amendment of a resolution
put to
the meeting for which it is given as the proxy thinks fit. The instrument
of proxy shall, unless the contrary is stated therein, be valid as
well
for any adjournment of the meeting as for the meeting to which it
relates.
|
|
82.
|
A
vote given in accordance with the terms of an instrument of proxy
shall be
valid notwithstanding the previous death or insanity of the principal,
or
revocation of the instrument of proxy or of the authority under which
it
was executed, provided that no intimation in writing of such death,
insanity or revocation shall have been received by the Company at
the
Office or the Registration Office (or such other place as may be
specified
for the delivery of instruments of proxy in the notice convening
the
meeting or other document sent therewith) two hours at least before
the
commencement of the meeting or adjourned meeting, or the taking of
the
poll, at which the instrument of proxy is
used.
|
|
83.
|
Anything
which under these Articles a Member may do by proxy he may likewise
do by
his duly appointed attorney and the provisions of these Articles
relating
to proxies and instruments appointing proxies shall apply mutatis
mutandis
in relation to any such attorney and the instrument under which such
attorney is appointed.
|
CORPORATIONS
ACTING BY REPRESENTATIVES
|
84.
|
(1)
|
Any
corporation which is a Member may by resolution of its directors
or other
governing body authorize such person as it thinks fit to act as its
representative at any meeting of the Company or at any meeting of
any
class of Members. The person so authorized shall be entitled to exercise
the same powers on behalf of such corporation as the corporation
could
exercise if it were an individual Member and such corporation shall
for
the purposes of these Articles be deemed to be present in person
at any
such meeting if a person so authorized is present
thereat.
|
|
|
(2)
|
If
a clearing house (or its nominee(s)), being a corporation, is a Member,
it
may authorize such persons as it thinks fit to act as its representatives
at any meeting of the Company or at any meeting of any class of Members
provided that the authorization shall specify the number and class
of
shares in respect of which each such representative is so authorized.
Each
person so authorized under the provisions of this Article shall be
deemed
to have been duly authorized without further evidence of the facts
and be
entitled to exercise the same rights and powers on behalf of the
clearing
house (or its nominee(s)) as if such person was the registered holder
of
the shares of the Company held by the clearing house (or its nominee(s))
including the right to vote individually on a show of
hands.
|
|
|
(3)
|
Any
reference in these Articles to a duly authorized representative of
a
Member being a corporation shall mean a representative authorized
under
the provisions of this Article.
|
ACTION
BY WRITTEN RESOLUTIONS OF MEMBERS
|
85.
|
Any
action required or permitted to be taken at any annual or extraordinary
general meetings of the Company may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders
of
outstanding shares, in the case of an ordinary resolution, having
not less
than the minimum number of votes that would be necessary to authorize
or
take such action at a meeting at which all shares entitled to vote
thereon
were present and voted, and in the case of a special resolution,
by all
holders of outstanding shares, and shall be delivered to the Company
by
delivery to its principal place of business or an officer or agent
of the
Company having custody of the book in which proceedings of general
meetings are recorded.
|
BOARD
OF DIRECTORS
|
86.
|
(1)
|
Unless
otherwise determined by the Company in general meeting, the number
of
Directors shall not be less than two (2). There shall be no maximum
number
of Directors unless otherwise determined from time to time by the
Members
in general meeting. The Directors shall be elected or appointed in
the
first place by the subscribers to the Memorandum of Association or
by a
majority of them and thereafter in accordance with Article 87 and
shall
hold office until their successors are elected or appointed.
|
|
|
(2)
|
Subject
to the Articles and the Law, the Company may by ordinary resolution
elect
any person to be a Director either to fill a casual vacancy or as
an
addition to the existing Board.
|
|
|
(3)
|
The
Directors shall have the power from time to time and at any time
to
appoint any person as a Director to fill a casual vacancy on the
Board or
as an addition to the existing Board. Any Director so appointed by
the
Board shall hold office only until the next following annual general
meeting of the Company and shall then be eligible for re-election.
|
|
|
(4)
|
No
Director shall be required to hold any shares of the Company by way
of
qualification and a Director who is not a Member shall be entitled
to
receive notice of and to attend and speak at any general meeting
of the
Company and of all classes of shares of the
Company.
|
|
|
(5)
|
Subject
to any provision to the contrary in these Articles, a Director may
be
removed by way of (i) an ordinary resolution of the Members at any
time
before the expiration of his period of office notwithstanding anything
in
these Articles or in any agreement between the Company and such Director
(but without prejudice to any claim for damages under any such agreement),
or (ii) a two-thirds vote of the Board of Directors if such removal
is for
cause at any time before the expiration of his period of office
notwithstanding anything in these Articles or in any agreement between
the
Company and such Director (but without prejudice to any claim for
damages
under any such agreement).
|
|
|
(6)
|
A
vacancy on the Board created by the removal of a Director under the
provisions of subparagraph (5) above may be filled by the election
or
appointment by ordinary resolution of the Members at the meeting
at which
such Director is removed or by the affirmative vote of a simple majority
of the remaining Directors present and voting at a Board
meeting.
|
|
|
(7)
|
The
Company may from time to time in general meeting by ordinary resolution
increase or reduce the number of Directors but so that the number
of
Directors shall never be less than two
(2).
|
|
87.
|
[Intentionally
Omitted]
|
|
88.
|
[Intentionally
Omitted]
|
DISQUALIFICATION
OF DIRECTORS
|
89.
|
The
office of a Director shall be vacated if the
Director:
|
|
|
(1)
|
resigns
his office by notice in writing delivered to the Company at the Office
or
tendered at a meeting of the Board;
|
|
|
(2)
|
becomes
of unsound mind or dies;
|
|
|
(3)
|
without
special leave of absence from the Board, is absent from meetings
of the
Board for six consecutive months and the Board resolves that his
office be
vacated; or
|
|
|
(4)
|
becomes
bankrupt or has a receiving order made against him or suspends payment
or
compounds with his creditors;
|
|
|
(5)
|
is
prohibited by law from being a Director;
or
|
|
|
(6)
|
ceases
to be a Director by virtue of any provision of the Statutes or is
removed
from office pursuant to these
Articles.
|
EXECUTIVE
DIRECTORS
|
90.
|
The
Board may from time to time appoint any one or more of its body to
be a
managing director, joint managing director or deputy managing director
or
to hold any other employment or executive office with the Company
for such
period (subject to their continuance as Directors) and upon such
terms as
the Board may determine and the Board may revoke or terminate any
of such
appointments. Any such revocation or termination as aforesaid shall
be
without prejudice to any claim for damages that such Director may
have
against the Company or the Company may have against such Director.
A
Director appointed to an office under this Article shall be subject
to the
same provisions as to removal as the other Directors of the Company,
and
he shall (subject to the provisions of any contract between him and
the
Company) ipso facto and immediately cease to hold such office if
he shall
cease to hold the office of Director for any
cause.
|
|
91.
|
Notwithstanding
Articles 96, 97, 98 and 99, an executive director appointed to an
office
under Article 90 hereof shall receive such remuneration (whether
by way of
salary, commission, participation in profits or otherwise or by all
or any
of those modes) and such other benefits (including pension and/or
gratuity
and/or other benefits on retirement) and allowances as the Board
may from
time to time determine, and either in addition to or in lieu of his
remuneration as a Director.
|
|
92.
|
[Intentionally
Omitted]
|
|
93.
|
[Intentionally
Omitted]
|
|
94.
|
[Intentionally
Omitted]
|
|
95.
|
[Intentionally
Omitted]
|
DIRECTORS’
FEES AND EXPENSES
|
96.
|
The
Directors shall receive such remuneration as the Board may from time
to
time determine. Each Director shall be entitled to be repaid or prepaid
all traveling, hotel and incidental expenses reasonably incurred
or
expected to be incurred by him in attending meetings of the Board
or
committees of the board or general meetings or separate meetings
of any
class of shares or of debenture of the Company or otherwise in connection
with the discharge of his duties as a Director. The ordinary remuneration
of the Directors shall from time to time be determined by the Company
in
general meeting and shall (unless otherwise directed by the resolution
by
which it is voted) be divided amongst the Board in such proportions
and in
such manner as the Board may agree or, failing agreement, equally,
except
that any Director who shall hold office for part only of the period
in
respect of which such remuneration is payable shall be entitled only
to
rank in such division for a proportion of remuneration related to
the
period during which he has held office. Such remuneration shall be
deemed
to accrue from day to day.
|
|
97.
|
Each
Director shall be entitled to be repaid or prepaid all traveling,
hotel
and incidental expenses reasonably incurred or expected to be incurred
by
him in attending meetings of the Board or committees of the Board
or
general meetings or separate meetings of any class of shares or of
debentures of the Company or otherwise in connection with the discharge
of
his duties as a Director.
|
|
98.
|
Any
Director who, by request, goes or resides abroad for any purpose
of the
Company or who performs services which in the opinion of the Board
go
beyond the ordinary duties of a Director may be paid such extra
remuneration (whether by way of salary, commission, participation
in
profits or otherwise) as the Board may determine and such extra
remuneration
shall be in addition to or in substitution for any ordinary remuneration
provided for by or pursuant to any other
Article.
|
|
99.
|
The
Board shall obtain the approval of the Company in general meeting
before
making any payment to any Director or past Director of the Company
by way
of compensation for loss of office, or as consideration for or in
connection with his retirement from office (not being payment to
which the
Director is contractually
entitled).
|
DIRECTORS’
INTERESTS
|
100.
|
(a)
|
No
contract or transaction between the Company and 1 or more of its
Directors
or officers, or between the Company and any other corporation,
partnership, association, or other organization in which 1 or more
of its
Directors or officers, are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely
because the Director or officer is present at or participates in
the
meeting of the Board or committee which authorizes the contract or
transaction, or solely because any such Director's or officer's votes
are
counted for such purpose, if:
|
|
|
(1)
|
The
material facts as to the Director's or officer's relationship or
interest
and as to the contract or transaction are disclosed or are known
to the
Board of Directors or the committee, and the Board or committee in
good
faith authorizes the contract or transaction by the affirmative votes
of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
|
|
|
(2)
|
The
material facts as to the Director's or officer's relationship or
interest
and as to the contract or transaction are disclosed or are known
to the
Shareholders entitled to vote thereon, and the contract or transaction
is
specifically approved in good faith by vote of the Shareholders;
or
|
|
|
(3)
|
The
contract or transaction is fair as to the Company as of the time
it is
authorized, approved or ratified, by the Board, a committee or the
Shareholders.
|
|
|
(b)
|
Common
or interested Directors may be counted in determining the presence
of a
quorum and may vote at a meeting of the Board or of a committee which
authorizes the contract or transaction.
|
|
101.
|
[Intentionally
Ommitted]
|
|
102.
|
[Intentionally
Ommitted]
|
|
103.
|
[Intentionally
Ommitted]
|
GENERAL
POWERS OF THE DIRECTORS
|
104.
|
The
business of the Company shall be managed and conducted by the Board,
which
may pay all expenses incurred in forming and registering the Company
and
may exercise all powers of the Company (whether relating to the management
of the business of the Company or otherwise) which are not by the
Statutes
or by these Articles required to be exercised by the Company in general
meeting, subject nevertheless to the provisions of the Statutes and
of
these Articles and to such regulations being not inconsistent with
such
provisions, as may be prescribed by the Company in general meeting,
but no
regulations made by the Company in general meeting shall invalidate
any
prior act of the Board which would have been valid if such regulations
had
not been made. The general powers given by this Article shall not
be
limited or restricted by any special authority or power given to
the Board
by any other Article.
|
|
|
(2)
|
Without
prejudice to the general powers conferred by these Articles it is
hereby
expressly declared that the Board shall have the following
powers:
|
|
|
(a)
|
To
give to any person the right or option of requiring at a future date
that
an allotment shall be made to him of any share at par or at such
premium
as may be agreed.
|
|
|
(b)
|
To
give to any Directors, officers or employees of the Company an interest
in
any particular business or transaction or participation in the profits
thereof or in the general profits of the Company either in addition
to or
in substitution for a salary or other
remuneration.
|
|
|
(c)
|
To
resolve that the Company be deregistered in the Cayman Islands and
continued in a named jurisdiction outside the Cayman Islands subject
to
the provisions of the Law.
|
|
105.
|
[Intentionally
Omitted]
|
|
106.
|
The
Board may by power of attorney appoint any company, firm or person
or any
fluctuating body of persons, whether nominated directly or indirectly
by
the Board, to be the attorney or attorneys of the Company for such
purposes and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Board under these Articles)
and for
such period and subject to such conditions as it may think fit, and
any
such power of attorney may contain such provisions for the protection
and
convenience of persons dealing with any such attorney as the Board
may
think fit, and may also authorize any such attorney to sub-delegate
all or
any of the powers, authorities and discretions vested in him. Such
attorney or attorneys may, if so authorized under the Seal of the
Company,
execute any deed or instrument under their personal seal with the
same
effect as the affixation of the Company’s
Seal.
|
|
107.
|
The
Board may entrust to and confer upon a managing director, joint managing
director, deputy managing director, an executive director or any
Director
any of the powers exercisable by it upon such terms and conditions
and
with such restrictions as it thinks fit, and either collaterally
with, or
to the exclusion of, its own powers, and may from time to time revoke
or
vary all or any of such powers but no person dealing in good faith
and
without notice of such revocation or variation shall be affected
thereby.
|
|
108.
|
All
checks, promissory notes, drafts, bills of exchange and other instruments,
whether negotiable or transferable or not, and all receipts for moneys
paid to the Company shall be signed, drawn, accepted, endorsed or
otherwise executed, as the case may be, in such manner as the Board
shall
from time to time by resolution determine. The Company’s banking accounts
shall be kept with such banker or bankers as the Board shall from
time to
time determine.
|
|
109.
|
(1)
|
The
Board may establish or concur or join with other companies (being
subsidiary companies of the Company or companies with which it is
associated in business) in establishing and making contributions
out of
the Company’s moneys to any schemes or funds for providing pensions,
sickness or compassionate allowances, life assurance or other benefits
for
employees (which expression as used in this and the following paragraph
shall include any Director or ex-Director who may hold or have held
any
executive office or any office of profit under the Company or any
of its
subsidiary companies) and ex-employees of the Company and their dependants
or any class or classes of such
person.
|
|
|
(2)
|
The
Board may pay, enter into agreements to pay or make grants of revocable
or
irrevocable pensions or other benefits to employees and ex-employees
and
their dependants, or to any of such persons, including pensions or
benefits additional to those, if any, to which such employees or
ex-employees or their dependants are or may become entitled under
any such
scheme or fund as mentioned in the last preceding paragraph. Any
such
pension or benefit may, as the Board considers desirable, be granted
to an
employee either before and in anticipation of or upon or at any time
after
his actual retirement, and may be subject or not subject to any terms
or
conditions as the Board may
determine.
|
BORROWING
POWERS
|
110.
|
The
Board may exercise all the powers of the Company to raise or borrow
money
and to mortgage or charge all or any part of the undertaking, property
and
assets (present and future) and uncalled capital of the Company and,
subject to the Law, to issue debentures, bonds and other securities,
whether outright or as collateral security for any debt, liability
or
obligation of the Company or of any third
party.
|
|
111.
|
Debentures,
bonds and other securities may be made assignable free from any equities
between the Company and the person to whom the same may be
issued.
|
|
112.
|
Any
debentures, bonds or other securities may be issued at a discount
(other
than shares), premium or otherwise and with any special privileges
as to
redemption, surrender, drawings, allotment of shares, attending and
voting
at general meetings of the Company, appointment of Directors and
otherwise.
|
|
113.
|
(1)
|
Where
any uncalled capital of the Company is charged, all persons taking
any
subsequent charge thereon shall take the same subject to such prior
charge, and shall not be entitled, by notice to the Members or otherwise,
to obtain priority over such prior
charge.
|
|
|
(2)
|
The
Board shall cause a proper register to be kept, in accordance with
the
provisions of the Law, of all charges specifically affecting the
property
of the Company and of any series of debentures issued by the Company
and
shall duly comply with the requirements of the Law in regard to the
registration of charges and debentures therein specified and
otherwise.
|
PROCEEDINGS
OF THE DIRECTORS
|
114.
|
The
Board may meet for the dispatch of business, adjourn and otherwise
regulate its meetings as it considers appropriate. Questions arising
at
any meeting shall be determined by a majority of votes. In the case
of any
equality of votes the chairman of the meeting shall not have an additional
or casting vote and the resolution shall fail.
|
|
115.
|
A
meeting of the Board may be convened by the Secretary on request
of a
Director or by any Director. The Secretary shall convene a meeting
of the
Board of which notice may be given in writing or by telephone or
in such
other manner as the Board may from time to time determine whenever
he
shall be required so to do by the president or chairman, as the case
may
be, or any Director.
|
|
116.
|
(1)
|
The
quorum necessary for the transaction of the business of the Board
shall be
equal to a majority of the Board.
|
|
|
(2)
|
Directors
may participate in any meeting of the Board by means of a conference
telephone or other communications equipment through which all persons
participating in the meeting can communicate with each other
simultaneously and instantaneously and, for the purpose of counting
a
quorum, such participation shall constitute presence at a meeting
as if
those participating were present in
person.
|
|
|
(3)
|
Any
Director who ceases to be a Director at a Board meeting may continue
to be
present and to act as a Director and be counted in the quorum until
the
termination of such Board meeting if no other Director objects and
if
otherwise a quorum of Directors would not be
present.
|
|
117.
|
The
continuing Directors or a sole continuing Director may act notwithstanding
any vacancy in the Board but, if and so long as the number of Directors
is
reduced below the minimum number fixed by or in accordance with these
Articles, the continuing Directors or Director, notwithstanding that
the
number of Directors is below the number fixed by or in accordance
with
these Articles as the quorum or that there is only one continuing
Director, may act for the purpose of filling vacancies in the Board
or of
summoning general meetings of the Company but not for any other
purpose.
|
|
118.
|
The
Chairman of the Board shall be the chairman of all meetings of the
Board.
If the Chairman of the Board is not present at any meeting within
five (5)
minutes after the time appointed for holding the same, the Directors
present may choose one of their number to be chairman of the
meeting.
|
|
119.
|
A
meeting of the Board at which a quorum is present shall be competent
to
exercise all the powers, authorities and discretions for the time
being
vested in or exercisable by the
Board.
|
|
120.
|
(1)
|
The
Board may delegate any of its powers, authorities and discretions
to
committees, consisting of such Director or Directors and other persons
as
it thinks fit, and they may, from time to time, revoke such delegation
or
revoke the appointment of and discharge any such committees either
wholly
or in part, and either as to persons or purposes. Any committee so
formed
shall, in the exercise of the powers, authorities and discretions
so
delegated, conform to any regulations which may be imposed on it
by the
Board.
|
|
|
(2)
|
All
acts done by any such committee in conformity with such regulations,
and
in fulfillment of the purposes for which it was appointed, but not
otherwise, shall have like force and effect as if done by the Board,
and
the Board (or if the Board delegates such power, the committee) shall
have
power to remunerate the members of any such committee, and charge
such
remuneration to the current expenses of the
Company.
|
|
121.
|
The
meetings and proceedings of any committee consisting of two or more
members shall be governed by the provisions contained in these Articles
for regulating the meetings and proceedings of the Board so far as
the
same are applicable and are not superseded by any regulations imposed
by
the Board under the last preceding Article, indicating, without
limitation, any committee charter adopted by the Board for purposes
or in
respect of any such committee.
|
|
122.
|
A
resolution in writing signed by all the Directors except such as
are
temporarily unable to act through ill-health or disability shall
(provided
that such number is sufficient to constitute a quorum and further
provided
that a copy of such resolution has been given or the contents thereof
communicated to all the Directors for the time being entitled to
receive
notices of Board meetings in the same manner as notices of meetings
are
required to be given by these Articles) be as valid and effectual
as if a
resolution had been passed at a meeting of the Board duly convened
and
held. Such resolution may be contained in one document or in several
documents in like form each signed by one or more of the Directors
and for
this purpose a facsimile signature of a Director shall be treated
as
valid.
|
|
123.
|
All
acts bona fide done by the Board or by any committee or by any person
acting as a Director or members of a committee, shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of any member of the Board or such committee or person
acting
as aforesaid or that they or any of them were disqualified or had
vacated
office, be as valid as if every such person had been duly appointed
and
was qualified and had continued to be a Director or member of such
committee.
|
|
124.
|
[Intentionally
Omitted]
|
|
125.
|
[Intentionally
Omitted]
|
|
126.
|
[Intentionally
Omitted]
|
OFFICERS
|
127.
|
(1)
|
The
officers of the Company shall consist of the Chairman of the Board,
the
Directors and Secretary and such additional officers (who may or
may not
be Directors) as the Board may from time to time determine, all of
whom
shall be deemed to be officers for the purposes of the Law and these
Articles.
|
|
|
(2)
|
The
Directors shall, as soon as may be after each appointment or election
of
Directors, elect amongst the Directors a chairman and if more than
one
Director is proposed for this office, the election to such office
shall
take place in such manner as the Directors may
determine.
|
|
|
(3)
|
The
officers shall receive such remuneration as the Directors may from
time to
time determine.
|
|
128.
|
(1)
|
The
Secretary and additional officers, if any, shall be appointed by
the Board
and shall hold office on such terms and for such period as the Board
may
determine. If thought fit, two or more persons may be appointed as
joint
Secretaries. The Board may also appoint from time to time on such
terms as
it thinks fit one or more assistant or deputy
Secretaries.
|
|
|
(2)
|
The
Secretary shall attend all meetings of the Members and shall keep
correct
minutes of such meetings and enter the same in the proper books provided
for the purpose. He shall perform such other duties as are prescribed
by
the Law or these Articles or as may be prescribed by the
Board.
|
|
129.
|
The
officers of the Company shall have such powers and perform such duties
in
the management, business and affairs of the Company as may be delegated
to
them by the Directors from time to
time.
|
|
130.
|
A
provision of the Law or of these Articles requiring or authorizing
a thing
to be done by or to a Director and the Secretary shall not be satisfied
by
its being done by or to the same person acting both as Director and
as or
in place of the Secretary.
|
REGISTER
OF DIRECTORS AND OFFICERS
|
131.
|
The
Company shall cause to be kept in one or more books at its Office
a
Register of Directors and officers in which there shall be entered
the
full names and addresses of the Directors and officers and such other
particulars as required by the Law or as the Directors may determine.
The
Company shall send to the Registrar of Companies in the Cayman Islands
a
copy of such register, and shall from time to time notify to the
said
Registrar of any change that takes place in relation to such Directors
and
officers as required by the Law.
|
MINUTES
|
132.
|
(1)
|
The
Board shall cause minutes to be duly entered in books provided for
the
purpose:
|
|
|
(a)
|
of
all elections and appointments of
officers;
|
|
|
(b)
|
of
the names of the Directors present at each meeting of the Directors
and of
any committee of the Directors;
|
|
|
(c)
|
of
all resolutions and proceedings of each general meeting of the Members,
meetings of the Board and meetings of committees of the Board and
where
there are managers, of all proceedings of meetings of the managers.
|
|
|
(2)
|
Minutes
shall be kept by the Secretary at the
Office.
|
SEAL
|
133.
|
(1)
|
The
Company shall have one or more Seals, as the Board may determine.
For the
purpose of sealing documents creating or evidencing securities issued
by
the Company, the Company may have a securities seal which is a facsimile
of the Seal of the Company with the addition of the word “Securities” on
its face or in such other form as the Board may approve. The Board
shall
provide for the custody of each Seal and no Seal shall be used without
the
authority of the Board or of a committee of the Board authorized
by the
Board in that behalf. Subject as otherwise provided in these Articles,
any
instrument to which a Seal is affixed shall be signed autographically
by
one Director and the Secretary or by two Directors or by such other
person
(including a Director) or persons as the Board may appoint, either
generally or in any particular case, save that as regards any certificates
for shares or debentures or other securities of the Company the Board
may
by resolution determine that such signatures or either of them shall
be
dispensed with or affixed by some method or system of mechanical
signature. Every instrument executed in manner provided by this Article
shall be deemed to be sealed and executed with the authority of the
Board
previously given.
|
|
|
(2)
|
Where
the Company has a Seal for use abroad, the Board may by writing under
the
Seal appoint any agent or committee abroad to be the duly authorized
agent
of the Company for the purpose of affixing and using such Seal and
the
Board may impose restrictions on the use thereof as may be thought
fit.
Wherever in these Articles reference is made to the Seal, the reference
shall, when and so far as may be applicable, be deemed to include
any such
other Seal as aforesaid.
|
AUTHENTICATION
OF DOCUMENTS
|
134.
|
Any
Director or the Secretary or any person appointed by the Board for
the
purpose may authenticate any documents affecting the constitution
of the
Company and any resolution passed by the Company or the Board or
any
committee, and any books, records, documents and accounts relating
to the
business of the Company, and to certify copies thereof or extracts
therefrom as true copies or extracts, and if any books, records,
documents
or accounts are elsewhere than at the Office or the head office the
local
manager or other officer of the Company having the custody thereof
shall
be deemed to be a person so appointed by the Board. A document purporting
to be a copy of a resolution, or an extract from the minutes of a
meeting,
of the Company or of the Board or any committee which is so certified
shall be conclusive evidence in favor of all persons dealing with
the
Company upon the faith thereof that such resolution has been duly
passed
or, as the case may be, that such minutes or extract is a true and
accurate record of proceedings at a duly constituted
meeting.
|
|
135.
|
[Intentionally
Omitted]
|
DIVIDENDS
AND OTHER PAYMENTS
|
136.
|
Subject
to the Law, the Company in general meeting or the Board may from
time to
time declare dividends in any currency to be paid to the Members
but no
dividend shall be declared in excess of the amount recommended by
the
Board.
|
|
137.
|
Dividends
may be declared and paid out of the profits of the Company, realized
or
unrealized, or from any reserve set aside from profits which the
Directors
determine is no longer needed. The Board may also declare and pay
dividends out of share premium account or any other fund or account
which
can be authorized for this purpose in accordance with the Law.
|
|
138.
|
Except
in so far as the rights attaching to, or the terms of issue of, any
share
otherwise provide:
|
|
|
(a)
|
all
dividends shall be declared and paid according to the amounts paid
up on
the shares in respect of which the dividend is paid, but no amount
paid up
on a share in advance of calls shall be treated for the purposes
of this
Article as paid up on the share;
and
|
|
|
(b)
|
all
dividends shall be apportioned and paid pro rata according to the
amounts
paid up on the shares during any portion or portions of the period
in
respect of which the dividend is
paid.
|
|
139.
|
The
Board may from time to time pay to the Members such interim dividends
as
appear to the Board to be justified by the profits of the Company
and in
particular (but without prejudice to the generality of the foregoing)
if
at any time the share capital of the Company is divided into different
classes, the Board may pay such interim dividends in respect of those
shares in the capital of the Company which confer on the holders
thereof
deferred or non-preferential rights as well as in respect of those
shares
which confer on the holders thereof preferential rights with regard
to
dividend and provided that the Board acts bona fide the Board shall
not
incur any responsibility to the holders of shares conferring any
preference for any damage that they may suffer by reason of the payment
of
an interim dividend on any shares having deferred or non-preferential
rights and may also pay any fixed dividend which is payable on any
shares
of the Company half-yearly or on any other dates, whenever such profits,
in the opinion of the Board, justifies such
payment.
|
|
140.
|
The
Board may deduct from any dividend or other moneys payable to a Member
by
the Company on or in respect of any shares all sums of money (if
any)
presently payable by him to the Company on account of calls or
otherwise.
|
|
141.
|
No
dividend or other moneys payable by the Company on or in respect
of any
share shall bear interest against the
Company.
|
|
142.
|
Any
dividend, interest or other sum payable in cash to the holder of
shares
may be paid by check or warrant sent through the post addressed to
the
holder at his registered address or, in the case of joint holders,
addressed to the holder whose name stands first in the Register in
respect
of the shares at his address as appearing in the Register or addressed
to
such person and at such address as the holder or joint holders may
in
writing direct. Every such check or warrant shall, unless the holder
or
joint holders otherwise direct, be made payable to the order of the
holder
or, in the case of joint holders, to the order of the holder whose
name
stands first on the Register in respect of such shares, and shall
be sent
at his or their risk and payment of the check or warrant by the bank
on
which it is drawn shall constitute a good discharge to the Company
notwithstanding that it may subsequently appear that the same has
been
stolen or that any endorsement thereon has been forged. Any one of
two or
more joint holders may give effectual receipts for any dividends
or other
moneys payable or property distributable in respect of the shares
held by
such joint holders.
|
|
143.
|
All
dividends or bonuses unclaimed for one (1) year after having been
declared
may be invested or otherwise made use of by the Board for the benefit
of
the Company until claimed. Any dividend or bonuses unclaimed after
a
period of six (6) years from the date of declaration shall be forfeited
and shall revert to the Company. The payment by the Board of any
unclaimed
dividend or other sums payable on or in respect of a share into a
separate
account shall not constitute the Company a trustee in respect
thereof.
|
|
144.
|
Whenever
the Board or the Company in general meeting has resolved that a dividend
be paid or declared, the Board may further resolve that such dividend
be
satisfied wholly or in part by the distribution of specific assets
of any
kind and in particular of paid up shares, debentures or warrants
to
subscribe securities of the Company or any other company, or in any
one or
more of such ways, and where any difficulty arises in regard to the
distribution the Board may settle the same as it thinks expedient,
and in
particular may issue certificates in respect of fractions of shares,
disregard fractional entitlements or round the same up or down, and
may
fix the value for distribution of such specific assets, or any part
thereof, and may determine that cash payments shall be made to any
Members
upon the footing of the value so fixed in order to adjust the rights
of
all parties, and may vest any such specific assets in trustees as
may seem
expedient to the Board and may appoint any person to sign any requisite
instruments of transfer and other documents on behalf of the persons
entitled to the dividend, and such appointment shall be effective
and
binding on the Members. The Board may resolve that no such assets
shall be
made available to Members with registered addresses in any particular
territory or territories where, in the absence of a registration
statement
or other special formalities, such distribution of assets would or
might,
in the opinion of the Board, be unlawful or impracticable and in
such
event the only entitlement of the Members aforesaid shall be to receive
cash payments as aforesaid. Members affected as a result of the foregoing
sentence shall not be or be deemed to be a separate class of Members
for
any purpose whatsoever.
|
|
145.
|
(1)
|
Whenever
the Board or the Company in general meeting has resolved that a dividend
be paid or declared on any class of the share capital of the Company,
the
Board may further resolve either:
|
|
|
(a)
|
that
such dividend be satisfied wholly or in part in the form of an allotment
of shares credited as fully paid up, provided that the Members entitled
thereto will be entitled to elect to receive such dividend (or part
thereof if the Board so determines) in cash in lieu of such allotment.
In
such case, the following provisions shall
apply:
|
|
|
(i)
|
the
basis of any such allotment shall be determined by the
Board;
|
|
|
(ii)
|
the
Board, after determining the basis of allotment, shall give not less
than
ten (10) days’ Notice to the holders of the relevant shares of the right
of election accorded to them and shall send with such notice forms
of
election and specify the procedure to be followed and the place at
which
and the latest date and time by which duly completed forms of election
must be lodged in order to be
effective;
|
|
|
(iii)
|
the
right of election may be exercised in respect of the whole or part
of that
portion of the dividend in respect of which the right of election
has been
accorded; and
|
|
|
(iv)
|
the
dividend (or that part of the dividend to be satisfied by the allotment
of
shares as aforesaid) shall not be payable in cash on shares in respect
whereof the cash election has not been duly exercised (“the non-elected
shares”) and in satisfaction thereof shares of the relevant class shall
be
allotted credited as fully paid up to the holders of the non-elected
shares on the basis of allotment determined as aforesaid and for
such
purpose the Board shall capitalize and apply out of any part of the
undivided profits of the Company (including profits carried and standing
to the credit of any reserves or other special account, share premium
account, capital redemption reserve other than the Subscription Rights
Reserve) as the Board may determine, such sum as may be required
to pay up
in full the appropriate number of shares of the relevant class for
allotment and distribution to and amongst the holders of the non-elected
shares on such basis; or
|
|
|
(b)
|
that
the Members entitled to such dividend shall be entitled to elect
to
receive an allotment of shares credited as fully paid up in lieu
of the
whole or such part of the dividend as the Board may think fit. In
such
case, the following provisions shall
apply:
|
|
|
(i)
|
the
basis of any such allotment shall be determined by the
Board;
|
|
|
(ii)
|
the
Board, after determining the basis of allotment, shall give not less
than
ten (10) days’ Notice to the holders of the relevant shares of the right
of election accorded to them and shall send with such notice forms
of
election and specify the procedure to be followed and the place at
which
and the latest date and time by which duly completed forms of election
must be lodged in order to be
effective;
|
|
|
(iii)
|
the
right of election may be exercised in respect of the whole or part
of that
portion of the dividend in respect of which the right of election
has been
accorded; and
|
|
|
(iv)
|
the
dividend (or that part of the dividend in respect of which a right
of
election has been accorded) shall not be payable in cash on shares
in
respect whereof the share election has been duly exercised (“the elected
shares”) and in lieu thereof shares of the relevant class shall be
allotted credited as fully paid up to the holders of the elected
shares on
the basis of allotment determined as aforesaid and for such purpose
the
Board shall capitalize and apply out of any part of the undivided
profits
of the Company (including profits carried and standing to the credit
of
any reserves or other special account, share premium account, capital
redemption reserve other than the Subscription Rights Reserve) as
the
Board may determine, such sum as may be required to pay up in full
the
appropriate number of shares of the relevant class for allotment
and
distribution to and amongst the holders of the elected shares on
such
basis.
|
|
|
(2)
|
(a)
|
The
shares allotted pursuant to the provisions of paragraph (1) of this
Article shall rank pari passu in all respects with shares of the
same
class (if any) then in issue save only as regards participation in
the
relevant dividend or in any other distributions, bonuses or rights
paid,
made, declared or announced prior to or contemporaneously with the
payment
or declaration of the relevant dividend unless, contemporaneously
with the
announcement by the Board of their proposal to apply the provisions
of
sub-paragraph (a) or (b) of paragraph (2) of this Article in relation
to
the relevant dividend or contemporaneously with their announcement
of the
distribution, bonus or rights in question, the Board shall specify
that
the shares to be allotted pursuant to the provisions of paragraph
(1) of
this Article shall rank for participation in such distribution, bonus
or
rights.
|
|
|
(b)
|
The
Board may do all acts and things considered necessary or expedient
to give
effect to any capitalization pursuant to the provisions of paragraph
(1)
of this Article, with full power to the Board to make such provisions
as
it thinks fit in the case of shares becoming distributable in fractions
(including provisions whereby, in whole or in part, fractional
entitlements are aggregated and sold and the net proceeds distributed
to
those entitled, or are disregarded or rounded up or down or whereby
the
benefit of fractional entitlements accrues to the Company rather
than to
the Members concerned). The Board may authorize any person to enter
into
on behalf of all Members interested, an agreement with the Company
providing for such capitalization and matters incidental thereto
and any
agreement made pursuant to such authority shall be effective and
binding
on all concerned.
|
|
|
(3)
|
The
Company may upon the recommendation of the Board by ordinary resolution
resolve in respect of any one particular dividend of the Company
that
notwithstanding the provisions of paragraph (1) of this Article a
dividend
may be satisfied wholly in the form of an allotment of shares credited
as
fully paid up without offering any right to shareholders to elect
to
receive such dividend in cash in lieu of such
allotment.
|
|
|
(4)
|
The
Board may on any occasion determine that rights of election and the
allotment of shares under paragraph (1) of this Article shall not
be made
available or made to any shareholders with registered addresses in
any
territory where, in the absence of a registration statement or other
special formalities, the circulation of an offer of such rights of
election or the allotment of shares would or might, in the opinion
of the
Board, be unlawful or impracticable, and in such event the provisions
aforesaid shall be read and construed subject to such determination.
Members affected as a result of the foregoing sentence shall not
be or be
deemed to be a separate class of Members for any purpose
whatsoever.
|
|
|
(5)
|
Any
resolution declaring a dividend on shares of any class, whether a
resolution of the Company in general meeting or a resolution of the
Board,
may specify that the same shall be payable or distributable to the
persons
registered as the holders of such shares at the close of business
on a
particular date, notwithstanding that it may be a date prior to that
on
which the resolution is passed, and thereupon the dividend shall
be
payable or distributable to them in accordance with their respective
holdings so registered, but without prejudice to the rights inter
se in
respect of such dividend of transferors and transferees of any such
shares. The provisions of this Article shall mutatis mutandis apply
to
bonuses, capitalization issues, distributions of realized capital
profits
or offers or grants made by the Company to the
Members.
|
RESERVES
|
146.
|
(1)
|
The
Board shall establish an account to be called the share premium account
and shall carry to the credit of such account from time to time a
sum
equal to the amount or value of the premium paid on the issue of
any share
in the Company. Unless otherwise provided by the provisions of these
Articles, the Board may apply the share premium account in any manner
permitted by the Law. The Company shall at all times comply with
the
provisions of the Law in relation to the share premium
account.
|
|
|
(2)
|
Before
recommending any dividend, the Board may set aside out of the profits
of
the Company such sums as it determines as reserves which shall, at
the
discretion of the Board, be applicable for any purpose to which the
profits of the Company may be properly applied and pending such
application may, also at such discretion, either be employed in the
business of the Company or be invested in such investments as the
Board
may from time to time think fit and so that it shall not be necessary
to
keep any investments constituting the reserve or reserves separate
or
distinct from any other investments of the Company. The Board may
also
without placing the same to reserve carry forward any profits which
it may
think prudent not to distribute.
|
CAPITALISATION
|
147.
|
The
Company may, upon the recommendation of the Board, at any time and
from
time to time pass an ordinary resolution to the effect that it is
desirable to capitalize all or any part of any amount for the time
being
standing to the credit of any reserve or fund (including a share
premium
account and capital redemption reserve and the profit and loss account)
whether or not the same is available for distribution and accordingly
that
such amount be set free for distribution among the Members or any
class of
Members who would be entitled thereto if it were distributed by way
of
dividend and in the same proportions, on the footing that the same
is not
paid in cash but is applied either in or towards paying up the amounts
for
the time being unpaid on any shares in the Company held by such Members
respectively or in paying up in full unissued shares, debentures
or other
obligations of the Company, to be allotted and distributed credited
as
fully paid up among such Members, or partly in one way and partly
in the
other, and the Board shall give effect to such resolution provided
that,
for the purposes of this Article, a share premium account and any
capital
redemption reserve or fund representing unrealized profits, may be
applied
only in paying up in full unissued shares of the Company to be allotted
to
such Members credited as fully paid.
|
|
148.
|
The
Board may settle, as it considers appropriate, any difficulty arising
in
regard to any distribution under the last preceding Article and in
particular may issue certificates in respect of fractions of shares
or
authorize any person to sell and transfer any fractions or may resolve
that the distribution should be as nearly as may be practicable in
the
correct proportion but not exactly so or may ignore fractions altogether,
and may determine that cash payments shall be made to any Members
in order
to adjust the rights of all parties, as may seem expedient to the
Board.
The Board may appoint any person to sign on behalf of the persons
entitled
to participate in the distribution any contract necessary or desirable
for
giving effect thereto and such appointment shall be effective and
binding
upon the Members.
|
SUBSCRIPTION
RIGHTS RESERVE
|
149.
|
The
following provisions shall have effect to the extent that they are
not
prohibited by and are in compliance with the
Law:
|
|
|
(1)
|
If,
so long as any of the rights attached to any warrants issued by the
Company to subscribe for shares of the Company shall remain exercisable,
the Company does any act or engages in any transaction which, as
a result
of any adjustments to the subscription price in accordance with the
provisions of the conditions of the warrants, would reduce the
subscription price to below the par value of a share, then the following
provisions shall apply:
|
|
|
(a)
|
as
from the date of such act or transaction the Company shall establish
and
thereafter (subject as provided in this Article) maintain in accordance
with the provisions of this Article a reserve (the “Subscription Rights
Reserve”) the amount of which shall at no time be less than the sum which
for the time being would be required to be capitalized and applied
in
paying up in full the nominal
|
amount
of
the additional shares required to be issued and allotted credited as fully
paid
pursuant to sub-paragraph (c) below on the exercise in full of all the
subscription rights outstanding and shall apply the Subscription Rights Reserve
in paying up such additional shares in full as and when the same are
allotted;
|
|
(b)
|
the
Subscription Rights Reserve shall not be used for any purpose other
than
that specified above unless all other reserves of the Company (other
than
share premium account) have been extinguished and will then only
be used
to make good losses of the Company if and so far as is required by
law;
|
|
|
(c)
|
upon
the exercise of all or any of the subscription rights represented
by any
warrant, the relevant subscription rights shall be exercisable in
respect
of a nominal amount of shares equal to the amount in cash which the
holder
of such warrant is required to pay on exercise of the subscription
rights
represented thereby (or, as the case may be the relevant portion
thereof
in the event of a partial exercise of the subscription rights) and,
in
addition, there shall be allotted in respect of such subscription
rights
to the exercising warrantholder, credited as fully paid, such additional
nominal amount of shares as is equal to the difference
between:
|
|
|
(i)
|
the
said amount in cash which the holder of such warrant is required
to pay on
exercise of the subscription rights represented thereby (or, as the
case
may be, the relevant portion thereof in the event of a partial exercise
of
the subscription rights); and
|
|
|
(ii)
|
the
nominal amount of shares in respect of which such subscription rights
would have been exercisable having regard to the provisions of the
conditions of the warrants, had it been possible for such subscription
rights to represent the right to subscribe for shares at less than
par and
immediately upon such exercise so much of the sum standing to the
credit
of the Subscription Rights Reserve as is required to pay up in full
such
additional nominal amount of shares shall be capitalized and applied
in
paying up in full such additional nominal amount of shares which
shall
forthwith be allotted credited as fully paid to the exercising
warrantholders; and
|
|
|
(d)
|
if,
upon the exercise of the subscription rights represented by any warrant,
the amount standing to the credit of the Subscription Rights Reserve
is
not sufficient to pay up in full such additional nominal amount of
shares
equal to such difference as aforesaid to which the exercising
warrantholder is entitled, the Board shall apply any profits or reserves
then or thereafter becoming available (including, to the extent permitted
by law, share premium account) for such purpose until such additional
nominal amount of shares is paid up and allotted as aforesaid and
until
then no dividend or other distribution shall be paid or made on the
fully
paid shares of the Company then in issue. Pending such payment and
allotment, the exercising warrantholder shall be issued by the Company
with a certificate evidencing his right to the allotment of such
additional nominal amount of shares. The rights represented by any
such
certificate shall be in registered form and shall be transferable
in whole
or in part in units of one share in the like manner as the shares
for the
time being are transferable, and the Company shall make such arrangements
in relation to the maintenance of a register therefor and other matters
in
relation thereto as the Board may think fit and adequate particulars
thereof shall be made known to each relevant exercising warrantholder
upon
the issue of such certificate.
|
|
|
(2)
|
Shares
allotted pursuant to the provisions of this Article shall rank pari
passu
in all respects with the other shares allotted on the relevant exercise
of
the subscription rights represented by the warrant concerned.
Notwithstanding anything contained in paragraph (1) of this Article,
no
fraction of any share shall be allotted on exercise of the subscription
rights.
|
|
|
(3)
|
The
provision of this Article as to the establishment and maintenance
of the
Subscription Rights Reserve shall not be altered or added to in any
way
which would vary or abrogate, or which would have the effect of varying
or
abrogating the provisions for the benefit of any warrantholder or
class of
warrantholders under this Article without the sanction of a special
resolution of such warrantholders or class of
warrantholders.
|
|
|
(4)
|
A
certificate or report by the auditors for the time being of the Company
as
to whether or not the Subscription Rights Reserve is required to
be
established and maintained and if so the amount thereof so required
to be
established and maintained, as to the purposes for which the Subscription
Rights Reserve has been used, as to the extent to which it has been
used
to make good losses of the Company, as to the additional nominal
amount of
shares required to be allotted to exercising warrantholders credited
as
fully paid, and as to any other matter concerning the Subscription
Rights
Reserve shall (in the absence of manifest error) be conclusive and
binding
upon the Company and all warrantholders and
shareholders.
|
ACCOUNTING
RECORDS
|
150.
|
The
Board shall cause true accounts to be kept of the sums of money received
and expended by the Company, and the matters in respect of which
such
receipt and expenditure take place, and of the property, assets,
credits
and liabilities of the Company and of all other matters required
by the
Law or necessary to give a true and fair view of the Company’s affairs and
to explain its transactions.
|
|
151.
|
The
accounting records shall be kept at the Office or, at such other
place or
places as the Board decides and shall always be open to inspection
by the
Directors. No Member (other than a Director) shall have any right
of
inspecting any accounting record or book or document of the Company
except
as conferred by law or authorized by the Board or the Company in
general
meeting.
|
|
152.
|
Subject
to Article 153, a printed copy of the Directors’ report, accompanied by
the balance sheet and profit and loss account, including every document
required by law to be annexed thereto, made up to the end of the
applicable financial year and containing a summary of the assets
and
liabilities of the Company under convenient heads and a statement
of
income and expenditure, together with a copy of the Auditors’ report,
shall be sent to each person entitled thereto at least ten (10) days
before the date of the general meeting and laid before the Company
at the
annual general meeting held in accordance with Article 56 provided
that
this Article shall not require a copy of those documents to be sent
to any
person whose address the Company is not aware or to more than one
of the
joint holders of any shares or
debentures.
|
|
153.
|
Subject
to due compliance with all applicable Statutes, rules and regulations,
including, without limitation, the rules of the Designated Stock
Exchange,
and to obtaining all necessary consents, if any, required thereunder,
the
requirements of Article 152 shall be deemed satisfied in relation
to any
person by sending to the person in any manner not prohibited by the
Statutes, a summary financial statement derived from the Company’s annual
accounts and the directors’ report which shall be in the form and
containing the information required by applicable laws and regulations,
provided that any person who is otherwise entitled to the annual
financial
statements of the Company and the directors’ report thereon may, if he so
requires by notice in writing served on the Company, demand that
the
Company sends to him, in addition to a summary financial statement,
a
complete printed copy of the Company’s annual financial statement and the
directors’ report thereon.
|
|
154.
|
The
requirement to send to a person referred to in Article 152 the documents
referred to in that article or a summary financial report in accordance
with Article 153 shall be deemed satisfied where, in accordance with
all
applicable Statutes, rules and regulations, including, without limitation,
the rules of the Designated Stock Exchange, the Company publishes
copies
of the documents referred to in Article 152 and, if applicable, a
summary
financial report complying with Article 153, on the Company’s computer
network or in any other permitted manner (including by sending any
form of
electronic communication), and that person has agreed or is deemed
to have
agreed to treat the publication or receipt of such documents in such
manner as discharging the Company’s obligation to send to him a copy of
such documents.
|
AUDIT
|
155.
|
Subject
to applicable law and rules of the Designated Stock
Exchange:
|
|
|
(1)
|
At
the annual general meeting or at a subsequent extraordinary general
meeting in each year, the Members shall appoint an auditor to audit
the
accounts of the Company and such auditor shall hold office until
the
Members appoint another auditor. Such auditor may be a Member but
no
Director or officer or employee of the Company shall, during his
continuance in office, be eligible to act as an auditor of the
Company.
|
|
|
(2)
|
A
person, other than a retiring Auditor, shall not be capable of being
appointed Auditor at an annual general meeting unless notice in writing
of
an intention to nominate that person to the office of Auditor has
been
given not less than fourteen (14) days before the annual general
meeting
and furthermore, the Company shall send a copy of any such notice
to the
retiring Auditor.
|
|
|
(3)
|
The
Members may, at any general meeting convened and held in accordance
with
these Articles, by special resolution remove the Auditor at any time
before the expiration of his term of office and shall by ordinary
resolution at that meeting appoint another Auditor in his stead for
the
remainder of his term.
|
|
156.
|
Subject
to the Law the accounts of the Company shall be audited at least
once in
every year.
|
|
157.
|
The
remuneration of the Auditor shall be fixed by the Company in general
meeting or in such manner as the Members may
determine.
|
|
158.
|
If
the office of auditor becomes vacant by the resignation or death
of the
Auditor, or by his becoming incapable of acting by reason of illness
or
other disability at a time when his services are required, the Directors
shall fill the vacancy and determine the remuneration of such
Auditor.
|
|
159.
|
The
Auditor shall at all reasonable times have access to all books kept
by the
Company and to all accounts and vouchers relating thereto; and he
may call
on the Directors or officers of the Company for any information in
their
possession relating to the books or affairs of the
Company.
|
|
160.
|
The
statement of income and expenditure and the balance sheet provided
for by
these Articles shall be examined by the Auditor and compared by him
with
the books, accounts and vouchers relating thereto; and he shall make
a
written report thereon stating whether such statement and balance
sheet
are drawn up so as to present fairly the financial position of the
Company
and the results of its operations for the period under review and,
in case
information shall have been called for from Directors or officers
of the
Company, whether the same has been furnished and has been satisfactory.
The financial statements of the Company shall be audited by the Auditor
in
accordance with generally accepted auditing standards. The Auditor
shall
make a written report thereon in accordance with generally accepted
auditing standards and the report of the Auditor shall be submitted
to the
Members in general meeting. The generally accepted auditing standards
referred to herein may be those of a country or jurisdiction other
than
the Cayman Islands. If so, the financial statements and the report
of the
Auditor should disclose this act and name such country or
jurisdiction.
|
NOTICES
|
161.
|
Any
Notice or document, whether or not, to be given or issued under these
Articles from the Company to a Member shall be in writing or by cable,
telex or facsimile transmission message or other form of electronic
transmission or communication and any such Notice and document may
be
served or delivered by the Company on or to any Member either personally
or by sending it through the post in a prepaid envelope addressed
to such
Member at his registered address as appearing in the Register or
at any
other address supplied by him to the Company for the purpose or,
as the
case may be, by transmitting it to any such address or transmitting
it to
any telex or facsimile transmission number or electronic number or
address
or website supplied by him to the Company for the giving of Notice
to him
or which the person transmitting the notice reasonably and bona fide
believes at the relevant time will result in the Notice being duly
received by the Member or may also be served by advertisement in
appropriate newspapers in accordance with the requirements of the
Designated Stock Exchange or, to the extent permitted by the applicable
laws, by placing it on the Company’s website and giving to the member a
notice stating that the notice or other document is available there
(a
“notice of availability”). The notice of availability may be given to the
Member by any of the means set out above. In the case of joint holders
of
a share all notices shall be given to that one of the joint holders
whose
name stands first in the Register and notice so given shall be deemed
a
sufficient service on or delivery to all the joint
holders.
|
|
162.
|
Any
Notice or other document:
|
|
|
(a)
|
if
served or delivered by post, shall where appropriate be sent by airmail
and shall be deemed to have been served or delivered on the day following
that on which the envelope containing the same, properly prepaid
and
addressed, is put into the post; in proving such service or delivery
it
shall be sufficient to prove that the envelope or wrapper containing
the
notice or document was properly addressed and put into the post and
a
certificate in writing signed by the Secretary or other officer of
the
Company or other person appointed by the Board that the envelope
or
wrapper containing the notice or other document was so addressed
and put
into the post shall be conclusive evidence
thereof;
|
|
|
(b)
|
if
sent by electronic communication, shall be deemed to be given on
the day
on which it is transmitted from the server of the Company or its
agent. A
notice placed on the Company’s website is deemed given by the Company to a
Member on the day following that on which a notice of availability
is
deemed served on the Member; and
|
|
|
(c)
|
if
served or delivered in any other manner contemplated by these Articles,
shall be deemed to have been served or delivered at the time of personal
service or delivery or, as the case may be, at the time of the relevant
dispatch or transmission; and in proving such service or delivery
a
certificate in writing signed by the Secretary or other officer of
the
Company or other person appointed by the Board as to the act and
time of
such service, delivery, dispatch or transmission shall be conclusive
evidence thereof.
|
|
163.
|
(1)
|
Any
Notice or other document delivered or sent by post to or left at
the
registered address of any Member in pursuance of these Articles shall,
notwithstanding that such Member is then dead or bankrupt or that
any
other event has occurred, and whether or not the Company has notice
of the
death or bankruptcy or other event, be deemed to have been duly served
or
delivered in respect of any share registered in the name of such
Member as
sole or joint holder unless his name shall, at the time of the service
or
delivery of the notice or document, have been removed from the Register
as
the holder of the share, and such service or delivery shall for all
purposes be deemed a sufficient service or delivery of such Notice
or
document on all persons interested (whether jointly with or as claiming
through or under him) in the share.
|
|
|
(2)
|
A
notice may be given by the Company to the person entitled to a share
in
consequence of the death, mental disorder or bankruptcy of a Member
by
sending it through the post in a prepaid letter, envelope or wrapper
addressed to him by name, or by the title of representative of the
deceased, or trustee of the bankrupt, or by any like description,
at the
address, if any, supplied for the purpose by the person claiming
to be so
entitled, or (until such an address has been so supplied) by giving
the
notice in any manner in which the same might have been given if the
death,
mental disorder or bankruptcy had not
occurred.
|
|
|
(3)
|
Any
person who by operation of law, transfer or other means whatsoever
shall
become entitled to any share shall be bound by every notice in respect
of
such share which prior to his name and address being entered on the
Register shall have been duly given to the person from whom he derives
his
title to such share.
|
SIGNATURES
|
164.
|
For
the purposes of these Articles, a cable or telex or facsimile or
electronic transmission message purporting to come from a holder
of shares
or, as the case may be, a Director, or, in the case of a corporation
which
is a holder of shares from a director or the secretary thereof or
a duly
appointed attorney or duly authorized representative thereof for
it and on
its behalf, shall in the absence of express evidence to the contrary
available to the person relying thereon at the relevant time be deemed
to
be a document or instrument in writing signed by such holder or Director
in the terms in which it is
received.
|
WINDING
UP
|
165.
|
(a)
|
The
provisions of paragraphs 165 and 166 are subject to the provisions
of
paragraph 170 until such time as a Business Combination (as defined
in
paragraph 170) is consummated.
|
|
|
(b)(1)
|
The
Board shall have power in the name and on behalf of the Company to
present
a petition to the court for the Company to be wound
up.
|
|
|
(2)
|
A
resolution that the Company be wound up by the court or be wound
up
voluntarily shall be a special
resolution.
|
|
166.
|
(1)
|
Subject
to any special rights, privileges or restrictions as to the distribution
of available surplus assets on liquidation for the time being attached
to
any class or classes of shares (i) if the Company shall be wound
up and
the assets available for distribution amongst the Members of the
Company
shall be more than sufficient to repay the whole of the capital paid
up at
the commencement of the winding up, the excess shall be distributed
pari
passu amongst such members in proportion to the amount paid up on
the
shares held by them respectively and (ii) if the Company shall be
wound up
and the assets available for distribution amongst the Members as
such
shall be insufficient to repay the whole of the paid-up capital such
assets shall be distributed so that, a nearly as may be, the losses
shall
be borne by the Members in proportion to the capital paid up, or
which
ought to have been paid up, at the commencement of the winding up
on the
shares held by them respectively.
|
|
|
(2)
|
If
the Company shall be wound up (whether the liquidation is voluntary
or by
the court) the liquidator may, with the authority of a special resolution
and any other sanction required by the Law, divide among the Members
in
specie or kind the whole or any part of the assets of the Company
and
whether or not the assets shall consist of properties of one kind
or shall
consist of properties to be divided as aforesaid of different kinds,
and
may for such purpose set such value as he deems fair upon any one
or more
class or classes of property and may determine how such division
shall be
carried out as between the Members or different classes of Members.
The
liquidator may, with the like authority, vest any part of the assets
in
trustees upon such trusts for the benefit of the Members as the liquidator
with the like authority shall think fit, and the liquidation of the
Company may be closed and the Company dissolved, but so that no
contributory shall be compelled to accept any shares or other property
in
respect of which there is a
liability.
|
|
|
(3)
|
In
the event of winding-up of the Company in the People’s Republic of China,
every Member of the Company who is not for the time being in the
People’s
Republic of China shall be bound, within 14 days after the passing
of an
effective resolution to wind up the Company voluntarily, or the making
of
an order for the winding-up of the Company, to serve notice in writing
on
the Company appointing some person resident in the People’s Republic of
China and stating that person’s full name, address and occupation upon
whom all summonses, notices, process, orders and judgments in relation
to
or under the winding-up of the Company may be served, and in default
of
such nomination the liquidator of the Company shall be at liberty
on
behalf of such Member to appoint some such person, and service upon
any
such appointee, whether appointed by the Member or the liquidator,
shall
be deemed to be good personal service on such Member for all purposes,
and, where the liquidator makes any such appointment, he shall with
all
convenient speed give notice thereof to such Member by advertisement
as he
shall deem appropriate or by a registered letter sent through the
post and
addressed to such Member at his address as appearing in the register,
and
such notice shall be deemed to be service on the day following that
on
which the advertisement first appears or the letter is
posted.
|
INDEMNITY
|
167.
|
(1)
|
The
Directors, Secretary and other officers and every Auditor for the
time
being of the Company and the liquidator or trustees (if any) for
the time
being acting in relation to any of the affairs of the Company and
everyone
of them, and everyone of their heirs, executors and administrators,
shall
be indemnified and secured harmless out of the assets and profits
of the
Company from and against all actions, costs, charges, losses, damages
and
expenses which they or any of them, their or any of their heirs,
executors
or administrators, shall or may incur or sustain by or by reason
of any
act done, concurred in or omitted in or about the execution of their
duty,
or supposed duty, in their respective offices or trusts; and none
of them
shall be answerable for the acts, receipts, neglects or defaults
of the
other or others of them or for joining in any receipts for the sake
of
conformity, or for any bankers or other persons with whom any moneys
or
effects belonging to the Company shall or may be lodged or deposited
for
safe custody, or for insufficiency or deficiency of any security
upon
which any moneys of or belonging to the Company shall be placed out
on or
invested, or for any other loss, misfortune or damage which may happen
in
the execution of their respective offices or trusts, or in relation
thereto; PROVIDED THAT this indemnity shall not extend to any matter
in
respect of any fraud or dishonesty which may attach to any of said
persons.
|
|
|
(2)
|
Each
Member agrees to waive any claim or right of action he might have,
whether
individually or by or in the right of the Company, against any Director
on
account of any action taken by such Director, or the failure of such
Director to take any action in the performance of his duties with
or for
the Company; PROVIDED THAT such waiver shall not extend to any matter
in
respect of any fraud or dishonesty which may attach to such
Director.
|
AMENDMENT
TO MEMORANDUM AND ARTICLES OF ASSOCIATION
AND
NAME OF COMPANY
|
168.
|
No
Article shall be rescinded, altered or amended and no new Article
shall be
made until the same has been approved by a special resolution of
the
Members. A special resolution shall be required to alter the provisions
of
the Memorandum of Association or to change the name of the Company.
|
INFORMATION
|
169.
|
No
Member shall be entitled to require discovery of or any information
respecting any detail of the Company’s trading or any matter which is or
may be in the nature of a trade secret or secret process which may
relate
to the conduct of the business of the Company and which in the opinion
of
the Directors it will be inexpedient in the interests of the members
of
the Company to communicate to the
public.
|
BUSINESS
COMBINATION
|
170.
|
(1)
|
Notwithstanding
any other provision of these Articles, the following provisions (2)
through (7) shall apply during the period commencing upon the adoption
of
these Articles and terminating upon the consummation of any “Business
Combination”. A “Business Combination” shall mean the acquisition by the
Company, through a stock exchange, asset acquisition or other business
combination, or controlling, through contractual arrangements, an
operating business (“Target Business”), that has its primary operations in
the People’s Republic of China, and a fair market value of at least 80% of
the Trust Fund (excluding deferred underwriting discounts and commissions)
at the time of the Business Combination. The Company may not consummate
a
business combination with a business that has its primary operations
outside of the People’s Republic of China. In the event of any conflict
between this Article and any other Article, the provisions of this
Article
shall prevail. Notwithstanding anything else herein to the contrary,
this
paragraph 170 may not be amended prior to the consummation of a Business
Combination.
|
|
|
(2)
|
Prior
to the consummation of any Business Combination, the Company shall
submit
such Business Combination to its Members for approval regardless
of
whether the Business Combination is of a type which normally would
require
such Member approval under the Law. In the event that the holders
of a
majority of the outstanding ordinary shares vote for the approval
of the
Business Combination, the Company shall be authorized to consummate
the
Business Combination; provided that the Company shall not consummate
any
Business Combination if 30% or more in interest of the holders of
IPO
Shares (defined below) exercise their redemption rights described
below.
In the event that the Company seeks to extend the Termination Date
(as
defined below) pursuant to paragraph 170(4)(iii) and such extension
is
approved, the maximum percentage of the IPO Shares which may be redeemed
in connection with a Business Combination will be reduced by the
percentage redeemed in the vote on the extension of the Termination
Date.
|
|
|
(3)
|
In
the event that a Business Combination is approved in accordance with
the
above paragraph 170(2) and is consummated by the Company or an extension
to the Termination Date (as defined below) is approved in accordance
with
paragraph 170(4)(iii) below, any Member holding ordinary shares (the
“IPO
Shares”) that were originally issued in the Company’s initial public
offering (“IPO”) of securities who voted against the Business Combination
or the extension to the Termination Date may, contemporaneous with
such
vote, demand that the Company redeem his or her IPO Shares for cash.
If so
demanded, the Company shall redeem such shares at a per share redemption
price equal to the quotient determined by dividing (i) the amount in
the Trust Fund (as defined below), as of two business days prior
to the
consummation of the Business Combination or the vote on the extension,
as
applicable, by (ii) the total number of IPO Shares. Notwithstanding
the foregoing, a holder of IPO Shares
,
together with any affiliate of such holder or any other person with
whom
such holder is acting in concert or as a ‘‘group’’ (as defined under
Section
13 of Securities and Exchange Act of 1934, as amended
),
will be restricted from redeeming more than 10% of the IPO Shares.
Nothing
herein will be deemed to restrict the way a holder of IPO Shares
may vote
such shares.
“Trust
Fund” shall mean the trust account established by the Company at the
consummation of its IPO and into which a certain amount of the net
proceeds of the IPO are deposited.
|
|
|
(4)
|
In
the event that the Company does not consummate a Business Combination
by a
date (the “Termination Date”) which shall be the later of (i) 18 months
after the consummation of the IPO or (ii) 24 months after the consummation
of the IPO in the event that either a letter of intent, an agreement
in
principle or a definitive agreement to complete a Business Combination
was
executed but was not consummated within 18 months of the IPO and
(iii) in
the event that the Company seeks the approval of the Company’s Members to
extend the time period within which it must consummate a Business
Combination to 36 months (which approval the Company may only seek
if the
Company has entered into a letter of intent, an agreement in principle
or
a definitive agreement to complete a Business Combination within
18 months
after the consummation of the IPO; provided that the extension of
the time
period will not be deemed to be approved if 30% or more in interest
of the
holders of IPO Shares exercise redemption rights in connection with
such
vote), 36 months after the consummation of the IPO, the existence
of this
Company shall cease except for the purposes of winding up the Company’s
affairs and liquidating and the Directors shall take all such action
necessary to dissolve and liquidate the Company as promptly as
practicable. In the event that the Company is so dissolved and liquidated,
only the holders of IPO Shares shall be entitled to receive liquidating
distributions and the Company shall pay no liquidating distributions
with
respect to any other outstanding securities of the
Company.
|
|
|
(5)
|
A
holder of IPO Shares shall be entitled to receive distributions from
the
Trust Fund only in the event of a liquidation of the Company or in
the
event he or she redeems his or her shares in accordance with
paragraph 170(3), above. In no other circumstances shall a holder of
IPO Shares have any right or interest of any kind in or to the Trust
Fund.
|
THE
COMPANIES LAW
EXEMPTED
COMPANY LIMITED BY SHARES
AMENDED
AND RESTATED
MEMORANDUM
OF ASSOCIATION
OF
HAMBRECHT
ASIA ACQUISITION CORP.
|
|
1.
|
The
name of the Company is
HAMBRECHT
ASIA ACQUISITION CORP
..
|
|
|
2.
|
The
Registered Office of the Company shall be at the offices of Codan
Trust
Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box
2681,
Grand Cayman, KY1-1111, Cayman
Islands.
|
|
|
3.
|
Subject
to the following provisions of this Memorandum, the objects for which
the
Company is established are
unrestricted.
|
|
|
4.
|
Subject
to the following provisions of this Memorandum, the Company shall
have and
be capable of exercising all the functions of a natural person of
full
capacity irrespective of any question of corporate benefit, as provided
by
Section 27(2) of The Companies Law.
|
|
|
5.
|
Nothing
in this Memorandum shall permit the Company to carry on a business
for
which a licence is required under the laws of the Cayman Islands
unless
duly licensed.
|
|
|
6.
|
The
Company shall not trade in the Cayman Islands with any person, firm
or
corporation except in furtherance of the business of the Company
carried
on outside the Cayman Islands; provided that nothing in this clause
shall
be construed as to prevent the Company effecting and concluding contracts
in the Cayman Islands, and exercising in the Cayman Islands all of
its
powers necessary for the carrying on of its business outside the
Cayman
Islands.
|
|
|
7.
|
The
liability of each member is limited to the amount from time to time
unpaid
on such member's shares.
|
|
|
8.
|
The
share capital of the Company is US$51,000 divided into 50,000,000
ordinary
shares of a nominal or par value of US$0.001 each and 1,000,000 preferred
shares of US$0.001 each.
|
|
|
9.
|
The
Company may exercise the power contained in the Companies Law to
deregister in the Cayman Islands and be registered by way of continuation
in another jurisdiction.
|
SPECIMEN
UNIT CERTIFICATE
|
NUMBER
|
UNITS
|
|
U-___________
|
|
SEE
REVERSE FOR
CERTAIN
DEFINITIONS
HAMBRECHT
ASIA ACQUISITION CORP.
CUSIP
UNITS
CONSISTING OF ONE ORDINARY SHARE AND ONE WARRANT
TO
PURCHASE ONE ORDINARY SHARE
|
THIS
CERTIFIES THAT
|
|
|
is
the owner of
|
|
Units.
|
Each
Unit
(“Unit”) consists of one (1) ordinary share, par value $.001 per share
(“Ordinary Share”), of HAMBRECHT ASIA ACQUISITION CORP., a Cayman Islands
corporation (the “Company”), and one warrant (the “Warrant”). Each Warrant
entitles the holder to purchase one (1) Ordinary Share for $6.00 per share
(subject to adjustment). Each Warrant will become exercisable on the later
of
(i) the Company’s completion of an initial business combination with one or more
target business or (ii) one (1) year from the date of the prospectus covering
the Warrants and will expire unless exercised before 5:00 p.m., New York City
Time, on ____________, 2013, or earlier upon redemption (the “Expiration Date”).
The
Ordinary
Shares
and
Warrants
comprising the Units represented by this certificate may trade separately on
the
45
th
day
after
the date of the prospectus unless the representative of the underwriters
determines that an earlier date is acceptable; provided, however, in no event
will the representative allow separate trading of the ordinary share and
warrants until the Company files an audited balance sheet
with
the
Securities and Exchange Commission
reflecting
the Company’s receipt of the gross proceeds of the offering
and
issues a press release when such separate trading will begin
.
The
terms of the Warrants are governed
by a
Warrant Agreement, dated as of _______, 2008, between the Company and
Continental Stock Transfer & Trust Company, as Warrant Agent, and are
subject to the terms and provisions contained therein, all of which terms and
provisions the holder of this certificate consents to by acceptance hereof.
Copies of the Warrant Agreement are on file at the office of the Warrant Agent
at 17 Battery Place, New York, New York 10004, and are available to any Warrant
holder on written request and without cost. This certificate is not valid unless
countersigned by the Transfer Agent and Registrar of the Company.
Witness
the facsimile seal of the Company and the facsimile signature of its duly
authorized officers.
|
By
|
|
|
|
|
|
|
Chief
Executive Officer
|
Secretary
|
HAMBRECHT
ASIA ACQUISITION CORP.
CORPORATE
SEAL
2007
CAYMAN
ISLANDS
HAMBRECHT
ASIA ACQUISITION CORP.
The
Company will furnish without charge to each stockholder who so requests, a
statement of the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof of
the
Company and the qualifications, limitations, or restrictions of such preferences
and/or rights.
The
following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN
COM -
as tenants in common
TEN
ENT -
as tenants by the entireties
JT
TEN -
as joint tenants with right of survivorship
and not as tenants in common
|
UNIF
GIFT MIN
ACT
-
|
|
Custodian
|
|
|
|
(Cust)
|
|
(Minor)
|
|
|
under Uniform Gifts to Minors
|
|
|
Act
|
|
|
|
|
(State)
|
Additional
Abbreviations may also be used though not in the above list.
For
value
received, ___________________________ hereby sell, assign and transfer
unto
|
PLEASE
INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING
NUMBER OF ASSIGNEE
|
|
|
|
|
|
|
|
|
|
|
(PLEASE
PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
|
|
|
|
|
|
|
Units
|
|
represented
by the within Certificate, and do hereby irrevocably constitute and
appoint
|
|
|
Attorney
|
|
to
transfer the said Units on the books of the within named Company
will full
power of substitution in the
premises.
|
|
Dated
|
|
|
|
|
|
|
|
|
NOTICE:
The
signature to this assignment must correspond with the name as written
upon
the face of the certificate in every particular, without alteration
or
enlargement or any change whatever.
|
|
Signature(s)
Guaranteed:
|
|
|
|
THE
SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM,
PURSUANT
TO S.E.C. RULE 17Ad-15).
|
|
The
holder of this certificate shall be entitled to receive funds from
the
trust account only in the event of (i) the Company’s liquidation upon a
failure to consummate a business combination (ii) if the holder seeks
to
convert his respective shares into cash upon an extension of the
period of
time to complete a business combination to 36 months which he voted
against and which is approved by the shareholders of the Company
as set
forth in the Company ’s prospectus or (iii) upon a business combination
which he voted against and which is actually completed by the Company.
In
no other circumstances shall the holder have any right or interest
of any
kind in or to the trust account.
|
SPECIMEN
ORDINARY SHARE CERTIFICATE
HAMBRECHT
ASIA ACQUISITION CORP.
INCORPORATED
UNDER THE LAWS OF THE CAYMAN ISLANDS
ORDINARY
SHARE
SEE
REVERSE FOR
CERTAIN
DEFINITIONS
|
THIS CERTIFIES THAT
|
CUSIP
|
IS
THE
OWNER OF
FULLY
PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF
$.001
EACH OF THE ORDINARY SHARE OF
HAMBRECHT
ASIA ACQUISITION CORP.
transferable
on the books of the Company in person or by duly authorized
attorney
upon surrender of this certificate properly endorsed. The Company will
be
forced
to liquidate if it is unable to complete a business combination by
_________
or________, all as more fully described in the Company’s final
prospectus
dated _______, 2008. This certificate is not valid unless countersigned
by
the
Transfer Agent and registered by the Registrar. Witness the seal of
the
Company and the facsimile signatures of its duly authorized
officers.
Dated:
|
|
|
|
Chief
Executive Officer
|
Secretary
|
HAMBRECHT
ASIA ACQUISITION CORP.
CORPORATE
SEAL
2007
CAYMAN
ISLANDS
The
following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN
COM -
as tenants in common
TEN
ENT -
as tenants by the entireties
JT
TEN -
as joint tenants with right of survivorship
and not as tenants in common
|
UNIF
GIFT MIN ACT -
|
|
Custodian
|
|
|
|
(Cust)
|
|
(Minor)
|
|
|
under
Uniform Gifts to Minors
|
|
|
Act
|
|
|
|
|
(State)
|
Additional
Abbreviations may also be used though not in the above list.
HAMBRECHT
ASIA ACQUISITION CORP.
The
Company will furnish without charge to each shareholder who so requests the
powers, designations, preferences and relative, participating, optional or
other
special rights of each class of share or series thereof of the Company and
the
qualifications, limitations, or restrictions of such preferences and/or rights.
This certificate and the shares represented thereby are issued and shall be
held
subject to all the provisions of the Articles of Association and all amendments
thereto and resolutions of the Board of Directors providing for the issue of
shares of Preferred Share (copies of which may be obtained from the secretary
of
the Corporation), to all of which the holder of this certificate by acceptance
hereof assents.
For
value
received, ___________________________ hereby sell, assign and transfer
unto
|
PLEASE
INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING
NUMBER OF ASSIGNEE
|
|
|
|
|
|
|
|
|
|
|
(PLEASE
PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
|
|
|
|
|
|
|
shares
|
|
of
the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
|
|
|
Attorney
|
|
to
transfer the said share on the books of the within named Corporation
will
full power of substitution in the premises.
|
|
Dated
|
|
|
|
|
|
|
|
|
NOTICE:
The
signature to this assignment must correspond with the name as written
upon
the face of the certificate in every particular, without alteration
or
enlargement or any change whatever.
|
|
Signature(s)
Guaranteed:
|
|
|
|
THE
SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM,
PURSUANT
TO S.E.C. RULE 17Ad-15).
|
|
The
holder of this certificate shall be entitled to receive funds from
the
trust account only in the event of (i) the Company’s liquidation
upon
a failure to consummate a business combination (ii) if the holder
seeks to
convert his respective shares into cash upon an extension of the
period of
time to complete a business combination to 36 months which he voted
against and which is approved by the shareholders of the Company
as set
forth in the Company ’s prospectus or (iii) upon a business combination
which he voted against and which is actually completed by the
Company
.
In no other circumstances shall the holder have any right or interest
of
any kind in or to the trust
account.
|
Exhibit
4.5
WARRANT
AGREEMENT
This
Warrant Agreement, dated as of
[ ],
2008 (the “Agreement”) by and between Hambrecht Asia Acquisition Corp., a
corporation organized under the laws of the Cayman Islands (the “Company”), with
offices at 13/F Tower 2, New World Tower, 18 Queens Road Central, Hong Kong,
and
Continental Stock Transfer & Trust Company, a New York corporation (the
“Warrant Agent”), with offices at 17 Battery Place, New York, New York
10004.
WHEREAS,
the Company is engaged in a public offering (the “Public Offering”) of 4,000,000
Units (“Units”) of the Company, each Unit consisting of one ordinary share, par
value $0.001 per share (the “Ordinary Share”) and one warrant to purchase one
Ordinary Share (the “Warrant”) and, in connection therewith, has determined to
issue and deliver up to 4,000,000 Warrants (the “Public Warrants”) to the public
investors;
WHEREAS,
the Company has heretofore engaged in a private offering (the “Private
Offering”) of 1,150,000 warrants (the “Insider Warrants”) of the Company to
certain persons named in the Registration Statement (as defined
below);
WHEREAS,
in connection with the Public Offering, the Company has determined to sell
and
deliver to Broadband Capital Management, Inc. (the “Broadband”), as
representative of the Underwriters, an option to purchase 280,000 Units of
the
Company, which Units contain 280,000 Ordinary Shares and 280,000 Warrants (the
“Representative Warrants”);
WHEREAS,
the Company has filed with the Securities and Exchange Commission (the “SEC”) a
Registration Statement, No. 333-146147 on Form S-1 (the “Registration
Statement”)
for
the registration, under the Securities Act of 1933, as amended (the “Act”) of,
among other securities,
the
Public Warrants and the Ordinary Shares issuable upon exercise of the Public
Warrants and the Representative’s Warrants and the Ordinary Shares issuable upon
exercise of the Representative’s Warrants;
WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and
the
Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange, redemption and exercise of the Warrants;
WHEREAS,
the Company desires to provide for the form and provisions of the Warrants,
the
terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and
the
holders of the Public Warrants, the Insider Warrants and the Representative’s
Warrants (each, the “Warrant”; collectively, the “Warrants”); and
WHEREAS,
all acts and things have been done and performed which are necessary to make
the
Warrants, when executed on behalf of the Company and countersigned by or on
behalf of the Warrant Agent, as provided herein, the valid, binding and legal
obligations of the Company, and to authorize the execution and delivery of
this
Agreement.
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
1.
Appointment
of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent
for the Company for the Warrants, and the Warrant
Agent
hereby accepts such appointment and agrees to perform the same in accordance
with the terms and conditions set forth in this Agreement.
2.
Warrants.
2.1
Form
of Warrant
.
Each
Warrant shall be issued in registered form only, shall be in substantially
the
form of
Exhibit
A
hereto,
the provisions of which are incorporated herein and shall be signed by, or
bear
the facsimile signature of, the Chairman of the Board of Directors and Chief
Executive Officer and/or Chief Financial Officer, Chief Operating Officer,
Treasurer or Assistant Secretary of the Company and shall bear a facsimile
of
the Company’s seal. In the event the person whose facsimile signature has been
placed upon any Warrant shall have ceased to serve in the capacity in which
such
person signed the Warrant before such Warrant is issued, it may be issued with
the same effect as if he or she had not ceased to be such at the date of
issuance.
2.2
Effect
of Countersignature
.
Unless
and until countersigned by the Warrant Agent pursuant to this Agreement, a
Warrant shall be invalid and of no effect and may not be exercised by the holder
thereof.
2.3
Registration
.
2.3.1
Warrant
Register
.
The
Warrant Agent shall maintain books (“Warrant Register”), for the registration of
original issuance and the registration of transfer of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register
the
Warrants in the names of the respective holders thereof in such denominations
and otherwise in accordance with instructions delivered to the Warrant Agent
by
the Company.
2.3.2
Registered
Holder
.
Prior
to due presentment for registration of transfer of any Warrant, the Company
and
the Warrant Agent may deem and treat the person in whose name such Warrant
shall
be registered upon the Warrant Register (“registered holder”), as the absolute
owner of such Warrant and of each Warrant represented thereby (notwithstanding
any notation of ownership or other writing on the Warrant Certificate made
by
anyone other than the Company or the Warrant Agent), for the purpose of any
exercise thereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
2.4
Detachability
of Public Warrants
.
The
Public Warrants and Ordinary Shares comprising the Units will begin separate
trading on the 45
th
day
after the effective date of the Registration Statement hereof unless Broadband
informs the Company of its decision to allow earlier trading, subject to the
Company’s having filed the Current Report on Form 8-K and having issued a press
release announcing when such separate trading will begin, but in no event will
Broadband allow separate trading of the Public Warrants and Ordinary Shares
comprising the Units until the Company files with the SEC a Current Report
on
Form 8-K which includes an audited balance sheet reflecting the receipt by
the
Company of the gross proceeds of the sale of the Insider Warrants and the Public
Offering including the proceeds received by the Company from the exercise of
the
Underwriters’ Over-allotment Option, if the over-allotment option is exercised
prior to the filing of the Form 8-K.
2.5
Insider
Warrants
.
The
Insider Warrants may not be transferred until the consummation of the Business
Combination (as defined in the Registration Statement).
3.
Terms
and
Exercise of Warrants
3.1
Warrant
Price
.
Each
Warrant shall, when countersigned by the Warrant Agent, entitle the registered
holder thereof, subject to the provisions of such Warrant and of this Warrant
Agreement, to purchase from the Company the number of Ordinary Shares, at the
price of $6.00 per Ordinary Share, subject to the adjustments provided in
Section 4 hereof and in the last sentence of this Section 3.1. The term “Warrant
Price” as used in this Warrant Agreement refers to the price per share at which
Ordinary Shares may be purchased at the time a Warrant is exercised. The Company
in its sole discretion may lower the Warrant Price at any time prior to the
Expiration Date for a period of not less than ten (10) business days, provided
any such reduction shall be identical among all of the Warrants.
3.2
Duration
of Warrants
.
A
Warrant may be exercised only during the period (“Exercise Period”) commencing
on the later of the consummation by the Company of a stock exchange, asset
acquisition or other similar business combination (“Business Combination”) (as
described more fully in the Company’s Registration Statement) or _____________,
2009, and terminating at 5:00 p.m., New York City time on the earlier to occur
of (i) ____________, 2013 or (ii) the date fixed for redemption of the Warrants
as provided in Section 6 of this Agreement (“Expiration Date”). Notwithstanding
the foregoing, no Warrant shall be exercisable unless, at the time of exercise,
a registration statement relating to the Common Stock issuable upon the exercise
of such a Warrant is effective and current and a prospectus is available for
use
by the holders thereof and the Common Stock has been qualified or deemed to
be
exempt under the securities laws of the state of residence of the holder of
such
Warrants. Except with respect to the right to receive the Redemption Price
(as
set forth in Section 6 hereunder), each Warrant not exercised on or before
the
Expiration Date shall become void, and all rights thereunder and all rights
in
respect thereof under this Agreement shall cease at the close of business on
the
Expiration Date. The Company in its sole discretion may extend the duration
of
the Warrants by delaying the Expiration Date; provided, however, the Company
will provide notice to registered holders of the Warrants of such extension
of
not less than 20 days and, further provided that any such extension shall be
identical in duration among all of the Warrants.
3.3
Exercise
of Warrants
.
3.3.1
Payment
.
Subject
to the provisions of the Warrant and this Warrant Agreement, a Warrant, when
countersigned by the Warrant Agent, may be exercised by the registered holder
thereof by surrendering it, at the office of the Warrant Agent, or at the office
of its successor as Warrant Agent, in the Borough of Manhattan, City and State
of New York, with the subscription form, as set forth in the Warrant, duly
executed, and by paying in full, in lawful money of the United States, in cash,
good certified check or good bank draft payable to the order of the Company
(or
as otherwise agreed to by the Company), the Warrant Price for each full Ordinary
Share as to which the Warrant is exercised and any and all applicable taxes
due
in connection with the exercise of the Warrant, the exchange of the Warrant
for
the Ordinary Share, and the issuance of the Ordinary Share.
3.3.2
Issuance
of Certificates
.
As soon
as practicable after the exercise of any Warrant and the clearance of the funds
in payment of the Warrant Price, the Company shall issue to the registered
holder of such Warrant a certificate or certificates for the number of full
Ordinary Shares to which he is entitled, registered in such name or names as
may
be directed by him, her or it, and if such Warrant shall not have been exercised
in full, a new countersigned Warrant for the number of shares as to which such
Warrant shall not have been exercised. Notwithstanding the foregoing, the
Company shall not be obligated to deliver any securities pursuant to the
exercise of a Warrant unless (i) a registration statement under the Act with
respect to the Ordinary Shares is effective
or
(ii)
in the opinion of counsel to the Company, the exercise of the Warrants is exempt
from the registration requirements of the Act and such securities are qualified
for sale or exempt from qualification under applicable securities laws of the
states or other jurisdictions in which the registered holders reside
.
Warrants may not be exercised by, or securities issued to, any registered holder
in any state in which such exercise
or
issuance would be unlawful. In no event will the Company be required to provide
the registered holder of a warrant with a net-cash settlement or other
consideration in lieu of physical settlement in shares of Common Stock,
regardless of whether the Common Stock underlying the Warrants is registered
pursuant to an effective registration statement. Accordingly, the Warrants
may
expire unexercised and worthless if a current registration statement covering
the Common Stock is not effective
.
3.3.3
Valid
Issuance
.
All
Ordinary Shares issued upon the proper exercise of a Warrant in conformity
with
this Agreement shall be validly issued, fully paid and
nonassessable.
3.3.4
Date
of Issuance
.
Each
person in whose name any such certificate for Ordinary Shares is issued shall
for all purposes be deemed to have become the holder of record of such shares
on
the date on which the Warrant was surrendered and payment of the Warrant Price
was made, irrespective of the date of delivery of such certificate, except
that,
if the date of such surrender and payment is a date when the stock transfer
books of the Company are closed, such person shall be deemed to have become
the
holder of such shares at the close of business on the next succeeding date
on
which the stock transfer books are open.
3.3.5
Exercise
of Insider Warrant.
Notwithstanding anything contained herein to the contrary, the Insider Warrant
may, at any time, provided that at the time of exercise they are held by the
original purchaser thereof or its permitted assigns, be exercised by
surrendering such Insider Warrant for that number of shares of Common Stock
equal to the quotient obtained by dividing (x) the product of the number of
shares of Common Stock underlying the Warrant, multiplied by the difference
between the Warrant Price and the “FMV” (defined below) by (y) the FMV. The
“FMV” shall mean the average reported last sale price of the Common Stock for
the 10 trading days ending on the third business day prior to the date on which
notice of exercise is received by the Company.
4.
Adjustments.
4.1
Stock
Dividends - Split-Ups
.
If
after the date hereof, and subject to the provisions of Section 4.6 below,
the
number of outstanding Ordinary Shares is increased by a stock dividend payable
in Ordinary Shares, or by a split-up of Ordinary Shares, or other similar event,
then, on the effective date of such stock dividend, split-up or similar event,
the number of Ordinary Shares issuable on exercise of each Warrant shall be
increased in proportion to such increase in outstanding Ordinary
Shares.
4.2
Aggregation
of Shares
.
If
after the date hereof, and subject to the provisions of Section 4.6, the number
of outstanding Ordinary Shares is decreased by a consolidation, combination,
reverse stock split or reclassification of Ordinary Shares or other similar
event, then, on the effective date of such consolidation, combination, reverse
stock split, reclassification or similar event, the number of Ordinary Shares
issuable on exercise of each Warrant shall be decreased in proportion to such
decrease in outstanding Ordinary Shares.
4.3
Adjustments
in Exercise Price
.
Whenever the number of Ordinary Shares purchasable upon the exercise of the
Warrants is adjusted, as provided in Section 4.1 and 4.2 above, the Warrant
Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price
immediately prior to such adjustment by a fraction (x) the
numerator
of which shall be the number of Ordinary Shares purchasable upon the exercise
of
the Warrants immediately prior to such adjustment, and (y) the
denominator of which shall be the number of Ordinary Shares so purchasable
immediately thereafter.
4.4
Replacement
of Securities upon Reorganization, etc
.
In case
of any reclassification or reorganization of the outstanding Ordinary Shares
(other than a change covered by Section 4.1 or 4.2 hereof or that solely affects
the par value of such Ordinary Shares), or in the case of any consolidation
of
the Company with or into another corporation (other than a consolidation in
which the Company is the continuing corporation and that does not result in
any
reclassification or reorganization of the outstanding Ordinary Shares), or
in
the case of any sale or conveyance to another corporation or entity of the
assets or other property of the Company as an entirety or substantially as
an
entirety in connection with which the Company is dissolved, the Warrant holders
shall thereafter have the right to purchase and receive, upon the basis and
upon
the terms and conditions specified in the Warrants and in lieu of the Ordinary
Shares of the Company immediately theretofore purchasable and receivable upon
the exercise of the rights represented thereby, the kind and amount of shares
of
stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, or consolidation, or upon a dissolution
following any such sale or transfer, that the Warrant holder would have received
if such Warrant holder had exercised his, her or its Warrant(s) immediately
prior to such event; and if any reclassification also results in a change in
Ordinary Shares covered by Section 4.1 or 4.2, then such adjustment shall be
made pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.4. The provisions
of
this Section 4.4 shall similarly apply to successive reclassifications,
reorganizations, or consolidations, sales or other transfers.
4.5
Notices
of Changes in Warrant
.
Upon
every adjustment of the Warrant Price or the number of shares issuable upon
exercise of a Warrant, the Company shall give written notice thereof to the
Warrant Agent, which notice shall state the Warrant Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of a Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the occurrence of any event specified in Sections
4.1, 4.2, 4.3 or 4.4, then, in any such event, the Company shall give written
notice to the Warrant holder, at the last address set forth for such holder
in
the warrant register, of the record date or the effective date of the event.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such event.
4.6
No
Fractional Shares
.
Notwithstanding any provision contained in this Warrant Agreement to the
contrary, the Company shall not issue fractional shares upon exercise of
Warrants. If, by reason of any adjustment made pursuant to this Section 4,
the
holder of any Warrant would be entitled, upon the exercise of such Warrant,
to
receive a fractional interest in a share, the Company shall, upon such exercise,
round up to the nearest whole number the number of the Ordinary Shares to be
issued to the Warrant holder.
4.7
Form
of Warrant
.
The
form of Warrant need not be changed because of any adjustment pursuant to this
Section 4, and Warrants issued after such adjustment may state the same Warrant
Price and the same number of shares as is stated in the Warrants initially
issued pursuant to this Agreement. However, the Company may at any time in
its
sole discretion make any change in the form of Warrant that the Company may
deem
appropriate and that does not affect the substance thereof, and any Warrant
thereafter issued or countersigned, whether in exchange or substitution for
an
outstanding Warrant or otherwise, may be in the form as so changed.
5.
Transfer
and Exchange of Warrants.
5.1
Transfer
of Warrants.
Prior to
the date the warrants are detached from the Units (the “Detachment Date”), the
Public Warrants may be transferred or exchanged only together with the Unit
in
which such Warrant is included, and only for the purpose of effecting, or in
conjunction with, a transfer or exchange of such Unit. Furthermore, each
transfer of a Unit on the register relating to such Units shall operate also
to
transfer the Warrants included in such Unit. From and after the Detachment
Date,
this Section 5.1 will have no further force and effect.
5.2
Registration
of Transfer
.
The
Warrant Agent shall register the transfer, from time to time, of any outstanding
Warrant upon the Warrant Register, upon surrender of such Warrant for transfer,
properly endorsed with signatures properly guaranteed and accompanied by
appropriate instructions for transfer. Upon any such transfer, a new Warrant
representing an equal aggregate number of Warrants shall be issued and the
old
Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled
shall
be delivered by the Warrant Agent to the Company from time to time upon
request.
5.3
Procedure
for Surrender of Warrants
.
Warrants may be surrendered to the Warrant Agent, together with a written
request for exchange or transfer, and thereupon the Warrant Agent shall issue
in
exchange therefor one or more new Warrants as requested by the registered holder
of the Warrants so surrendered, representing an equal aggregate number of
Warrants; provided, however, that in the event that a Warrant surrendered for
transfer bears a restrictive legend, the Warrant Agent shall not cancel such
Warrant and issue new Warrants in exchange therefor until the Warrant Agent
has
received an opinion of counsel for the Company stating that such transfer may
be
made and indicating whether the new Warrants must also bear a restrictive
legend.
5.4
Fractional
Warrants
.
The
Warrant Agent shall not be required to effect any registration of transfer
or
exchange which will result in the issuance of a warrant certificate for a
fraction of a warrant.
5.5
Service
Charges
.
No
service charge shall be made for any exchange or registration of transfer of
Warrants.
5.6
Warrant
Execution and Countersignature
.
The
Warrant Agent is hereby authorized to countersign and to deliver, in accordance
with the terms of this Agreement, the Warrants required to be issued pursuant
to
the provisions of this Section 5, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrants duly executed on
behalf of the Company for such purpose.
6.
Redemption.
6.1
Redemption
.
Subject
to Section 6.4 hereof, not less than all of the outstanding Warrants may be
redeemed, at the option of the Company, at any time after they become
exercisable and prior to their expiration, at the office of the Warrant Agent,
upon the notice referred to in Section 6.2., at the price of $.01 per Warrant
(“Redemption Price”), provided that the last sales price of the Ordinary Shares
has been at least $11.50 per share, on each of twenty (20) trading days within
any thirty (30) trading day period ending on the third business day prior to
the
date on which notice of redemption is given.
Notwithstanding the foregoing, the Registration Statement must be current in
order for the Company to exercise its redemption rights pursuant to this Section
6. The provisions of this Section 6.1 may not be modified, amended or deleted
without the prior written consent of Broadband. The Insider Warrants are not
subject to this Section 6 provided they are held by the initial purchasers
thereof, or their permitted assigns (as described in the Securities Escrow
Agreement entered into by the holders of Insider Warrants on the date
hereof)
.
6.2
Date
Fixed for, and Notice of, Redemption
.
In the
event the Company shall elect to redeem all of the Warrants, the Company shall
fix a date for the redemption. Notice of redemption shall be mailed by first
class mail, postage prepaid, by the Company not less than 30 days prior to
the
date fixed for redemption to the registered holders of the Warrants to be
redeemed at their last addresses as they shall appear on the registration books.
Any notice mailed in the manner herein provided shall be conclusively presumed
to have been duly given whether or not the registered holder received such
notice.
6.3
Exercise
After Notice of Redemption
.
The
Warrants may be exercised in accordance with Section 3 of this Agreement at
any
time after notice of redemption shall have been given by the Company pursuant
to
Section 6.2. hereof and prior to the time and date fixed for redemption. On
and
after the redemption date, the record holder of the Warrants shall have no
further rights except to receive, upon surrender of the Warrants, the Redemption
Price.
6.4
Outstanding
Warrants Only
.
The
Company understands that the redemption rights provided for by this Section
6
apply only to outstanding Warrants. To the extent a person holds rights to
purchase Warrants, such purchase rights shall not be extinguished by redemption.
However, once such purchase rights are exercised, the Company may redeem the
Warrants issued upon such exercise provided that the criteria for redemption
is
met. The provisions of this Section 6.4 may not be modified, amended or deleted
without the prior written consent of the Representative.
6.5
Exclusion
of Private Warrants
. The Company understands that the redemption rights
provided for by this Section 6 do not apply to the Insider Warrants if at the
time of redemption such warrants continue to be held by the initial purchaser
or
its permitted assigns. However, once such Insider Warrants are transferred
other
than to any permitted assign, the Company may redeem the Insider Warrants,
provided the criteria for redemption are met, including the opportunity of
the
Warrant holder to exercise prior to redemption pursuant to Section
6.3.
7.
Other
Provisions Relating to Rights of Holders of Warrants.
7.1
No
Rights as Stockholder
.
A
Warrant does not entitle the registered holder thereof to any of the rights
of a
stockholder of the Company, including, without limitation, the right to receive
dividends, or other distributions, exercise any preemptive rights to vote or
to
consent or to receive notice as stockholders in respect of the meetings of
stockholders or the election of directors of the Company or any other
matter.
7.2
Lost,
Stolen, Mutilated, or Destroyed Warrants
.
If any
Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant
Agent may on such terms as to indemnity or otherwise as they may in their
discretion impose (which shall, in the case of a mutilated Warrant, include
the
surrender thereof), issue a new Warrant of like denomination, tenor, and date
as
the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant
shall
constitute a substitute contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any
time
enforceable by anyone.
7.3
Reservation
of Ordinary Shares
.
The
Company shall at all times reserve and keep available a number of its authorized
but unissued Ordinary Shares that will be sufficient to permit the exercise
in
full of all outstanding Warrants issued pursuant to this Agreement.
7.4
Registration
of Ordinary Shares
.
The
Company agrees that prior to the commencement of the Exercise Period, it shall
file with the Securities and Exchange Commission a post-effective amendment
to
the Registration Statement, or a new registration statement, for the
registration, under the Act, of, and it shall take such action as is necessary
to qualify for sale, in those states in which the Warrants were initially
offered by the Company, the Ordinary Shares issuable upon exercise of the
Warrants. In either case, the Company will use its best efforts to cause the
same to become effective and to maintain the effectiveness of such registration
statement until the expiration of the Warrants in accordance with the provisions
of this Agreement.
In
addition, the Company agrees to use its reasonable efforts to register such
securities under the blue sky laws of the states of residence of the exercising
warrant holders to the extent an exemption is not available.
The
provisions of this Section 7.4 may not be modified, amended or deleted without
the prior written consent of the Representative.
8.
Concerning
the Warrant Agent and Other Matters.
8.1
Payment
of Taxes
.
The
Company will from time to time promptly pay all taxes and charges that may
be
imposed upon the Company or the Warrant Agent in respect of the issuance or
delivery of Ordinary Shares upon the exercise of Warrants, but the Company
shall
not be obligated to pay any transfer taxes in respect of the Warrants or such
shares.
8.2
Resignation
or Consolidation of Warrant Agent
.
8.2.1
Appointment
of Successor Warrant Agent
.
The
Warrant Agent, or any successor to it hereafter appointed, may resign its duties
and be discharged from all further duties and liabilities hereunder after giving
sixty (60) days’ notice in writing to the Company. If the office of the Warrant
Agent becomes vacant by resignation or incapacity to act or otherwise, the
Company shall appoint in writing a successor Warrant Agent in place of the
Warrant Agent. If the Company shall fail to make such appointment within a
period of 30 days after it has been notified in writing of such resignation
or
incapacity by the Warrant Agent or by the holder of the Warrant (who shall,
with
such notice, submit his Warrant for inspection by the Company), then the holder
of any Warrant may apply to the Supreme Court of the State of New York for
the
County of New York for the appointment of a successor Warrant Agent at the
Company’s cost. Any successor Warrant Agent, whether appointed by the Company or
by such court, shall be a corporation organized and existing under the laws
of
the State of New York, in good standing and having its principal office in
the
Borough of Manhattan, City and State of New York, and authorized under such
laws
to exercise corporate trust powers and subject to supervision or examination
by
federal or state authority. After appointment, any successor Warrant Agent
shall
be vested with all the authority, powers, rights, immunities, duties, and
obligations of its predecessor Warrant Agent with like effect as if originally
named as Warrant Agent hereunder, without any further act or deed; but if for
any reason it becomes necessary or appropriate, the predecessor Warrant Agent
shall execute and deliver, at the expense of the Company, an instrument
transferring to such successor Warrant Agent all the authority, powers, and
rights of such predecessor Warrant Agent hereunder; and upon request of any
successor Warrant Agent the Company shall make, execute, acknowledge, and
deliver any and all instruments in writing for more fully and effectually
vesting in and confirming to such successor Warrant Agent all such authority,
powers, rights, immunities, duties, and obligations.
8.2.2
Notice
of Successor Warrant Agent
.
In the
event a successor Warrant Agent shall be appointed, the Company shall give
notice thereof to the predecessor Warrant Agent and the transfer agent for
the
Ordinary Shares not later than the effective date of any such
appointment.
8.2.3
Merger
or Consolidation of Warrant Agent
.
Any
corporation into which the Warrant Agent may be merged or with which it may
be
consolidated
or any corporation resulting from any merger or consolidation to which the
Warrant Agent shall be a party shall be the successor Warrant
Agent
under this Agreement without any further act.
8.3
Fees
and Expenses of Warrant Agent
.
8.3.1
Remuneration
.
The
Company agrees to pay the Warrant Agent reasonable remuneration for its services
as such Warrant Agent hereunder and will reimburse the Warrant Agent upon demand
for all expenditures that the Warrant Agent may reasonably incur in the
execution of its duties hereunder.
8.3.2
Further
Assurances
.
The
Company agrees to perform, execute, acknowledge, and deliver or cause to be
performed, executed, acknowledged, and delivered all such further and other
acts, instruments, and assurances as may reasonably be required by the Warrant
Agent for the carrying out or performing of the provisions of this
Agreement.
8.4
Liability
of Warrant Agent
.
8.4.1
Reliance
on Company Statement
.
Whenever in the performance of its duties under this Warrant Agreement, the
Warrant Agent shall deem it necessary or desirable that any fact or matter
be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a statement signed by the Co-Chief Executive Officer or Chairman
of the Board of the Company and delivered to the Warrant Agent. The Warrant
Agent may rely upon such statement for any action taken or suffered in good
faith by it pursuant to the provisions of this Agreement.
8.4.2
Indemnity
.
The
Warrant Agent shall be liable hereunder only for its own negligence, willful
misconduct or bad faith. The Company agrees to indemnify the Warrant Agent
and
save it harmless against any and all liabilities, including judgments, costs
and
reasonable counsel fees, for anything done or omitted by the Warrant Agent
in
the execution of this Agreement except as a result of the Warrant Agent’s
negligence, willful misconduct, or bad faith.
8.4.3
Exclusions
.
The
Warrant Agent shall have no responsibility with respect to the validity of
this
Agreement or with respect to the validity or execution of any Warrant (except
its countersignature thereof); nor shall it be responsible for any breach by
the
Company of any covenant or condition contained in this Agreement or in any
Warrant; nor shall it be responsible to make any adjustments required under
the
provisions of Section 4 hereof or responsible for the manner, method, or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment; nor shall it by any act hereunder be deemed to
make
any representation or warranty as to the authorization or reservation of any
Ordinary Shares to be issued pursuant to this Agreement or any Warrant or as
to
whether any Ordinary Shares will when issued be valid and fully paid and
nonassessable.
8.5
Acceptance
of Agency
.
The
Warrant Agent hereby accepts the agency established by this Agreement and agrees
to perform the same upon the terms and conditions herein set forth and among
other things, shall account promptly to the Company with respect to Warrants
exercised and concurrently account for, and pay to
the
Company, all moneys received by the Warrant Agent for the purchase of shares
of
the Company’s Ordinary Shares
through
the exercise of Warrants.
8.6
Waiver
.
The Warrant Agent hereby waives any and all right, title, interest or claim
of
any kind (“Claim”) in or to any distribution of the Trust Account (as defined in
that certain Investment Management Trust Agreement, dated as of the date hereof,
by and between the Company and the Warrant Agent as trustee thereunder), and
hereby agrees not to seek recourse, reimbursement, payment or satisfaction
for
any Claim against the Trust Account for any reason whatsoever.
9.
Miscellaneous
Provisions.
9.1
Successors
.
All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Warrant Agent shall bind and inure to the benefit of their respective
successors and assigns.
9.2
Notices
.
Any
notice, statement or demand authorized by this Warrant Agreement to be given
or
made by the Warrant Agent or by the holder of any Warrant to or on the Company
shall be sufficiently given when so delivered if by hand or overnight delivery
or if sent by certified mail or private courier service within five days after
deposit of such notice, postage prepaid, addressed (until another address is
filed in writing by the Company with the Warrant Agent), as
follows:
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Attn:
John Wang, Chief Executive Officer
Any
notice, statement or demand authorized by this Agreement to be given or made
by
the holder of any Warrant or by the Company to or on the Warrant
Agent
shall be sufficiently given when so delivered if by hand or overnight delivery
or if sent by certified mail or private courier service within five days after
deposit of such notice, postage prepaid, addressed (until another address is
filed in writing by the Warrant Agent with the Company), as
follows:
Continental
Stock Transfer & Trust Company
17
Battery Place
New
York,
New York 10004
Attn:
[ ]
with
a
copy in each case to:
Loeb
& Loeb LLP
345
Park
Avenue
New
York,
New York 10154
Attn:
Mitchell S. Nussbaum, Esq.
and
Broadband
Capital Management
712
Fifth
Avenue
New
York,
New York 10019
Attn:
T.
Corby Hocker
and
Ellenoff
Grossman & Schole LLP
370
Lexington Avenue
New
York,
New York 10017
Fax:
(212) 370-7889
Attn:
Douglas S. Ellenoff, Esq.
9.3
Applicable
law
.
The
validity, interpretation, and performance of this Agreement and of the Warrants
shall be governed in all respects by the laws of the State of New York, without
giving effect to conflict of laws. The Company hereby agrees that any action,
proceeding or claim against it arising out of or relating in any way to this
Agreement shall be brought and enforced in the courts of the State of New York
or the United States District Court for the Southern District of New York,
and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company hereby waives any objection to such exclusive jurisdiction and
that
such courts represent an inconvenient forum. Any such process or summons to
be
served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 9.2 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company
in any action, proceeding or claim.
9.4
Persons
Having Rights under this Agreement
.
Nothing
in this Agreement expressed and nothing that may be implied from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the parties hereto and the registered
holders of the Warrants and, for the purposes of Sections 6.1, 6.4, 7.4 and
9.2
hereof, the Representative, any right, remedy, or claim under or by reason
of
this Warrant Agreement or of any covenant, condition, stipulation, promise,
or
agreement hereof. The Representative shall be deemed to be a third-party
beneficiary of this Agreement with respect to Sections 6.1, 6.4, 7.4 and 9.2
hereof. All covenants, conditions, stipulations, promises, and agreements
contained in this Warrant Agreement shall be for the sole and exclusive benefit
of the parties hereto (and the Representative with respect to the Sections
6.1,
6.4, 7.4 and 9.2 hereof) and their successors and assigns and of the registered
holders of the Warrants.
9.5
Examination
of the Warrant Agreement
.
A copy
of this Agreement shall be available at all reasonable times at the office
of
the Warrant Agent in the Borough of Manhattan, City and State of New York,
for
inspection by the registered holder of any Warrant. The Warrant Agent may
require any such holder to submit his Warrant for inspection by it.
9.6
Counterparts
.
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
9.7
Effect
of Headings
.
The
Section headings herein are for convenience only and are not part of this
Warrant Agreement and shall not affect the interpretation thereof.
9.8
Amendments
.
This
Warrant Agreement may be amended by the parties hereto without the consent
of
any registered holder for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained herein or adding
or changing any other provisions with respect to matters or questions arising
under this Warrant Agreement as the parties may deem necessary or desirable
and
that the parties deem shall not adversely affect the interest of the registered
holders. All other modifications or amendments, including any amendment to
increase the Warrant Price or shorten the Exercise Period, shall require the
written consent of each of Broadband and the registered holders of a majority
of
the then outstanding Warrants. Notwithstanding the foregoing, the Company may
lower the Warrant Price or extend the duration of the Exercise Period in
accordance with Sections 3.1 and 3.2, respectively, without such
consent.
9.9
Severability
.
This
Warrant Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Warrant Agreement or of any other term or provision
hereof. Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as a part of
this
Warrant Agreement a provision as similar in terms to such invalid or
unenforceable provision as may be possible and be valid and
enforceable.
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as
of the day and year first above written.
|
|
|
|
|
|
HAMBRECHT
ASIA ACQUISITION CORP.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
Continental
Stock Transfer & Trust Company
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
EXHIBIT
4.6
THE
REGISTERED HOLDER OF THIS PURCHASE OPTION, BY ITS ACCEPTANCE HEREOF, AGREES
THAT
IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION, EXCEPT AS HEREIN
PROVIDED, AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT
WILL
NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR
A
PERIOD OF SIX MONTHS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE
OTHER THAN (I) BROADBAND CAPITAL MANAGEMENT LLC (“BROADBAND”) OR ITS AFFILIATES
OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING (DEFINED
HEREIN), OR (II) A BONA FIDE OFFICER, PARTNER OR EMPLOYEE OF BROADBAND OR OF
ANY
SUCH UNDERWRITER OR SELECTED DEALER.
THIS
PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF: (I)
,
2008
[SIX
MONTHS FROM EFFECTIVE DATE]
AND (II) THE CONSUMMATION BY HAMBRECHT ASIA ACQUISITION CORP. (THE “COMPANY”) OF
A MERGER, CAPITAL STOCK EXCHANGE, ASSET ACQUISITION OR OTHER SIMILAR BUSINESS
COMBINATION (A “BUSINESS COMBINATION”) (AS DESCRIBED MORE FULLY IN THE COMPANY’S
REGISTRATION STATEMENT (AS DEFINED HEREIN)). THIS PURCHASE OPTION SHALL BE
VOID
AFTER 5:00 P.M, NEW YORK CITY LOCAL TIME, ON
,
2013
[FIVE
YEARS FROM EFFECTIVE DATE].
UNIT
PURCHASE OPTION
FOR
THE PURCHASE OF
280,000
UNITS
OF
HAMBRECHT
ASIA ACQUISITION CORP.
1.
Purchase
Option
.
THIS
CERTIFIES THAT, in consideration of $100 duly paid by or on behalf of
Broadband
Capital Management LLC (collectively, with its successors and permitted assigns
and/or transferees, the
“
Holder
”
or
“Broadband”
),
as
registered owner of this Purchase Option, to Hambrecht Asia Acquisition Corp.,
a
company formed under the laws of the Cayman Islands (the “
Company
”),
Holder is entitled, at any time or from time to time after the closing of the
Offering (as defined below) and during the period commencing (the “
Commencement
Date
”)
on the
later of: (i) the consummation of a Business Combination and (ii)
,
2008
[six
months from the effective date of the registration
statement]
,
and
expiring (the “
Expiration
Date
”)
at or
before 5:00 p.m., New York City local time,
,
2013
[five
years from effective date of the registration statement]
,
but not
thereafter, to subscribe for, purchase and receive, in whole or in part, up
to
Two Hundred Eighty Thousand (280,000) units (the “
Units
”)
of the
Company, each Unit consisting of one ordinary share of the Company, par value
$.001 per share (the “
Ordinary
Shares
”),
and
one warrant (the “
Warrant
”)
to
purchase one Ordinary Share expiring five years from the effective date (the
“
Effective
Date
”)
of the
registration statement (the “
Registration
Statement
”)
pursuant to which Units are offered for sale to the public (the “
Offering
”).
Each
Warrant is on the same terms and conditions as the warrants underlying the
Units
being registered for sale to the public by way of the Registration
Statement
.
If the
Expiration Date is a day on which banking institutions are authorized by law
to
close, then this Purchase Option shall expire on the next succeeding day that
is
not such a day in accordance with the terms herein. During the period ending
on
the Expiration Date, the Company agrees not to take any action that would
terminate the Purchase Option. This Purchase Option is initially exercisable
at
$10.00 per Unit (the “
Exercise
Price
”).
The
number of Units purchasable hereunder and the Exercise Price are subject to
adjustment as provided in this Purchase Option.
2.
Exercise
.
2.1
Exercise
.
This
Purchase Option may be exercised by the Holder in whole or in part at any time
or in part from time to time on or after the Commencement Date and before the
Expiration Date by: (x) surrendering this Purchase Option to the Company, (y)
delivering a subscription form in the attached hereto as Annex I (duly executed
by the Holder) and (z) making payment of the Exercise Price in cash, certified
or official bank check payable to the order of the Company or wire transfer
of
immediately available funds (to an account designated by the Company), in any
case in an amount obtained by multiplying (a) the number of Units designated
by
the Holder in the subscription form by (b) the Exercise Price then in effect.
In
the event of a partial exercise or assignment hereof, the Company shall issue
and deliver to or upon the order of the Holder a new Purchase Option of like
tenor, in the name of the Holder or as the Holder (upon payment by the Holder
of
applicable transfer taxes) may request, evidencing the right to purchase the
aggregate number of Units for which such Purchase Option may still be exercised.
If the subscription rights represented hereby shall not be exercised at or
before 5:00 p.m., New York City local time on the Expiration Date, this Purchase
Option automatically shall become and be void, without further force or effect,
and all rights represented hereby shall cease and expire.
2.2
Legend
.
Each
certificate for the Units issued upon exercise of this Purchase Option and
each
certificate representing the underlying Ordinary Shares and Warrants and the
Ordinary Shares issuable upon exercise of the underlying Warrants (the
“
Warrant
Shares
”)
shall
bear a legend as follows, unless such Units, Ordinary Shares, Warrants and/or
Warrant Shares (collectively, the “
Securities
”)
have
been registered under the Securities Act of 1933, as amended (the “
Act
”):
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION
OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”
2.3
Cashless
Exercise
.
In lieu
of the payment of the Exercise Price multiplied by the number of Units for
which
this Purchase Option is exercisable (and in lieu of being entitled to receive
Ordinary Shares and Warrants) in the manner required by Section 2.1, the Holder
shall have the right (but not the obligation) to convert any exercisable but
unexercised portion of this Purchase Option into Units (the “
Conversion
Right
”)
as
follows: upon exercise of the Conversion Right, the Company shall deliver to
the
Holder (without payment by the Holder of any of the Exercise Price in cash)
that
number of Ordinary Shares and Warrants comprising that number of Units equal
to
the quotient obtained by dividing (x) the Value (as defined below) of the
portion of the Purchase Option being converted by (y) the Current Market Value
(as defined below) of the portion of the Purchase Option being converted. The
“
Value
”
of
the
portion of the Purchase Option being converted shall equal the remainder derived
from subtracting (a) (i) the Exercise Price multiplied by (ii) the number of
Units underlying the portion of this Purchase Option being converted from (b)
the Current Market Value (as defined below) of a Unit multiplied by the number
of Units underlying the portion of the Purchase Option being converted. As
used
herein, the term “
Current
Market Value
”
per
Unit at any date means: (A) in the event that neither the Units nor Warrants
are
still trading, the remainder derived from subtracting (x) the exercise price
of
the Warrants multiplied by the number of Ordinary Shares issuable upon exercise
of the Warrants underlying one Unit from (y) (i) the Current Market Price of
the
Ordinary Shares multiplied by (ii) the number of Ordinary Shares underlying
one
Unit, which shall include the Ordinary Shares underlying the Warrants included
in such Unit less the Exercise Price for the Unit plus the current Market Price
of the Ordinary Shares underlying the Unit; (B) in the event the Units, Ordinary
Shares and Warrants are still trading, (i) if the Units are listed on a national
securities exchange or quoted on the Nasdaq Global Market, Nasdaq Capital Market
or FINRA OTC Bulletin Board (or successor), the average of the last sale price
of the Units in the principal trading market for the Units as reported by the
exchange, Nasdaq or FINRA, as the case may be, for the ten trading days ending
on the third business day prior to exercise; or (ii) if the Units are not listed
on a national securities exchange or quoted on the Nasdaq Global Market, Nasdaq
Capital Market or the FINRA OTC Bulletin Board (or successor exchange), but
is
traded in the residual over-the-counter market, the average of the closing
bid
price for Units for the ten trading days ending on the third business day prior
to exercise for which such quotations are reported by the Pink Sheets, LLC
or
similar publisher of such quotations; and (C) in the event that the Units are
not still trading but the Ordinary Shares and Warrants underlying the Units
are
still trading, the Current Market Price of the Ordinary Shares plus the product
of (x) the Current Market Price of the Warrants and (y) the number of Ordinary
Shares underlying the Warrants included in one Unit. The “
Current
Market Price
”
shall
mean (i) if the Ordinary Shares (or Warrants, as the case may be) is listed
on a
national securities exchange or quoted on the Nasdaq Global Market, Nasdaq
Capital Market or FINRA OTC Bulletin Board (or successor such as the Bulletin
Board Exchange), the average of the sale price of the Ordinary Shares (or
Warrants) in the principal trading market for the Ordinary Shares as reported
by
the exchange, Nasdaq or the FINRA, as the case may be, for the ten trading
days
ending on the third business day prior to exercise; (ii) if the Ordinary Shares
(or Warrants, as the case may be) is not listed on a national securities
exchange or quoted on the Nasdaq Global Market, Nasdaq Capital Market or the
FINRA OTC Bulletin Board (or successor exchange), but is traded in the residual
over-the-counter market, the closing bid price for the Ordinary Shares (or
Warrants) on the last trading day preceding the date in question for which
such
quotations are reported by the Pink Sheets, LLC or similar publisher of such
quotations; and (iii) if the fair market value of the Ordinary Shares cannot
be
determined pursuant to clause (i) or (ii) above, such price as the Board of
Directors of the Company shall determine, in good faith.
2.4
Mechanics
of Cashless Exercise
.
The
cashless exercise right set forth herein may be exercised by the Holder on
any
business day on or after the Commencement Date and not later than the Expiration
Date by delivering the Purchase Option with the duly executed exercise form
attached hereto with the cashless exercise section completed to the Company,
exercising the cashless exercise right and specifying the total number of Units
the Holder will purchase pursuant to such right.
2.5
No
Cash Settlement
.
Notwithstanding
anything to the contrary contained in this Purchase Option, under no
circumstances will the Company be required to net cash settle the exercise
of
the Purchase Option or the Warrants underlying the Purchase Option.
2.6
Effective
Registration Statement
.
The
Warrants underlying this Purchase Option are exercisable only during those
periods of time in which the Company maintains the effectiveness of the
Registration Statement. If the Company fails to maintain the effectiveness
of
the Registration Statement, the Warrants underlying this Purchase Option may
expire worthless.
3.
Transfer
.
3.1
General
Restrictions
.
Holder
agrees that, pursuant to FINRA Rule 2710(g)(1), it will not sell this Purchase
Option during the Company’s Offering, nor shall such Holder sell, transfer,
assign, pledge, hypothecate or otherwise dispose of this Purchase Option
(including the Securities hereunder) or cause this Purchase Option or the
Securities hereunder to be the subject of any hedging, short sale, derivative,
put or call transaction that would result in the effective economic disposition
of this Purchase Option or the Securities hereunder, except as provided for
in
FINRA Rule 2710(g)(2).
3.2
Restrictions
Imposed by the Act
.
The
Securities evidenced by this Purchase Option shall not be transferred unless
and
until (i) the Company has received the opinion of counsel for the Holder that
the Securities may be transferred pursuant to an exemption from registration
under the Act and applicable state securities laws, the availability of which
is
established to the reasonable satisfaction of the Company (the Company hereby
agreeing that the opinion of Ellenoff, Grossman & Schole LLP shall be deemed
satisfactory evidence of the availability of an exemption), or (ii) a
registration statement or a post-effective amendment to the Registration
Statement relating to such Securities has been filed by the Company and declared
effective by the Securities and Exchange Commission (the “
SEC
”)
and
compliance with applicable state securities law has been
established.
4.
New
Purchase Options to be Issued
.
4.1
Partial
Exercise or Transfer
.
Subject
to the restrictions in Section 3 hereof, this Purchase Option may be exercised
or assigned in whole or in part. In order to make any permitted assignment
or
transfer, the Holder must deliver to the Company the assignment form attached
hereto as Annex II duly executed and completed, together with the Purchase
Option and payment of all transfer taxes, if any, payable in connection
therewith. The Company shall within five (5) business days transfer this
Purchase Option on the books of the Company and shall execute and deliver a
new
Purchase Option or Purchase Options of like tenor to the appropriate assignee(s)
expressly evidencing the right to purchase the aggregate number of Units
purchasable hereunder or such portion of such number as shall be contemplated
by
any such assignment or transfer.
4.2
Lost
Certificate
.
Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Purchase Option and of reasonably satisfactory
indemnification or the posting of a bond, the Company shall execute and deliver
a new Purchase Option of like tenor and date. Any such new Purchase Option
executed and delivered as a result of such loss, theft, mutilation or
destruction shall constitute a substitute contractual obligation on the part
of
the Company.
5.
Registration
Rights
.
5.1
Demand
Registration
.
5.1.1
Grant
of Right
.
The
Company, upon written demand (an “
Demand
Notice
”)
of the
Holder(s) of at least 51% (the “
Majority
Holders
”)
of the
Purchase Options and/or the underlying Units and/or the underlying Securities,
agrees to register all or any portion of the Purchase Option and the underlying
Securities (collectively, the “
Registrable
Securities
”)
as
requested by the Majority Holders. The Company will file a registration
statement or a post-effective amendment to the Registration Statement covering
the Registrable Securities within sixty (60) days after receipt of the Initial
Demand Notice and use its commercially reasonable efforts to have such
registration statement or post-effective amendment declared effective as soon
as
possible thereafter, subject to compliance with review by the SEC. The demand
for registration may be made at any time beginning six (6) months prior to
the
Commencement Date. The Company covenants and agrees to give written notice
of
its receipt of any Demand Notice by any Holder(s) to all other registered
Holders of the Purchase Options and/or the Registrable Securities within ten
(10) days from the date of the receipt of any such Demand Notice.
5.1.2
Terms
.
The
Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including the expenses of one legal counsel selected
by
the Holders to represent them in connection with the registration of the
Registrable Securities, but the Holders shall pay any and all underwriting
commissions. The Company agrees to use its reasonable best efforts to qualify
or
register the Registrable Securities in such States as are reasonably requested
by the Majority Holder(s);
provided,
however
,
that in
no event shall the Company be required to register the Registrable Securities
in
a State in which such registration would cause (i) the Company to be obligated
to qualify to do business in such State, or would subject the Company to
taxation as a foreign corporation doing business in such jurisdiction or (ii)
the principal stockholders of the Company to be obligated to escrow their shares
of capital stock of the Company. The Company shall cause any registration
statement or post-effective amendment filed pursuant to the demand rights
granted under Section 5.1.1 to remain effective for a period of two (2) years
from the effective date of such registration statement or post-effective
amendment.
5.2
“Piggy-Back”
Registration
.
5.2.1
Grant
of Right
.
If at
any time during a period of seven (7) years commencing on the Effective Date
when there is not an effective registration statement covering all of the
Registrable Securities, the Company shall determine to prepare and file with
the
SEC a registration statement relating to an offering under the Act of any of
its
securities, other than pursuant to SEC Form S-4 or S-8 or any equivalent form,
the Company, upon the request of any Holder, as described below, shall cause
the
registration under the Act of the Registrable Securities as part of any such
registration statement filed by the Company;
provided,
however
,
that
if, in the written opinion of the Company’s managing underwriter or
underwriters, if any, for such offering, the inclusion of the Registrable
Securities, when added to the securities being registered by the Company or
the
selling stockholder(s), will exceed the maximum amount of the Company’s
securities (the “
Maximum
Number of Shares
”)
which
can be marketed (i) at a price reasonably related to their then current market
value, and (ii) without materially and adversely affecting the entire offering,
then the Company shall include in any such registration:
(i)
If
the
registration is undertaken for the Company’s account: (A) first, the Ordinary
Shares or other securities that the Company desires to sell that can be sold
without exceeding the Maximum Number of Shares; (B) second, to the extent that
the Maximum Number of Shares has not been reached under the foregoing clause
(A), the Ordinary Shares, if any, including the Registrable Securities, as
to
which registration has been requested pursuant to written contractual piggy-back
registration rights of security holders (pro rata in accordance with the number
of Ordinary Shares which each such person has actually requested to be included
in such registration, regardless of the number of Ordinary Shares with respect
to which such persons have the right to request such inclusion) that can be
sold
without exceeding the Maximum Number of Shares; and
(ii)
If
the
registration is a “demand” registration undertaken at the demand of persons
other than the holders of Registrable Securities pursuant to written contractual
arrangements with such persons, (A) first, the Ordinary Shares for the account
of the demanding persons that can be sold without exceeding the Maximum Number
of Shares; (B) second, to the extent that the Maximum Number of Shares has
not
been reached under the foregoing clause (A), the Ordinary Shares or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; and (C) third, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clauses (A) and (B),
the Registrable Securities as to which registration has been requested under
this Section 5.2 (pro rata in accordance with the number of shares of
Registrable Securities held by each such holder); and (D) fourth, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clauses (A), (B) and (C), the Ordinary Shares, if any, as to which registration
has been requested pursuant to written contractual piggy-back registration
rights which other shareholders desire to sell that can be sold without
exceeding the Maximum Number of Shares.
5.2.2
Terms
.
The
Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including the reasonable expenses of one legal counsel
selected by the Holders to represent them in connection with the registration
of
the Registrable Securities but the Holders shall pay any and all underwriting
commissions related to the Registrable Securities. In the event of such a
proposed registration, the Company shall furnish the then Holders of outstanding
Registrable Securities with not less than fifteen (15) days’ written notice
prior to the proposed date of filing of such registration statement. Such notice
to the Holders shall continue to be given for each applicable registration
statement filed (during the period in which the Purchase Option is exercisable)
by the Company until such time as all of the Registrable Securities have been
registered and sold. The holders of the Registrable Securities shall exercise
the “piggy-back” rights provided for herein by giving written notice, within ten
days of the receipt of the Company’s notice of its intention to file a
registration statement. The Company shall cause any registration statement
filed
pursuant to the above “piggyback” rights to remain effective for at least nine
months from the date that the Holders of the Registrable Securities are first
given the opportunity to sell all of such securities.
The
Company agrees, at its sole expense, to use its reasonable best efforts to
qualify or register the Registrable Securities in such States as are reasonably
requested by the Majority Holder(s); provided, however, that in no event shall
the Company be required to register the Registrable Securities in a State in
which such registration would cause (i) the Company to be obligated to qualify
to do business in such State, or would subject the Company to taxation as a
foreign corporation doing business in such jurisdiction or (ii) the principal
stockholders of the Company to be obligated to escrow their shares of capital
stock of the Company.
5.3
General
Terms
.
5.3.1
Indemnification
.
The
Company shall, notwithstanding any termination of this Purchase Option,
indemnify and hold harmless each Holder, the officers, directors, agents,
brokers, investment advisors and employees of each of them and each person,
if
any, who controls such Holders within the meaning of Section 15 of the Act
or
Section 20(a) of the Securities Exchange Act of 1934, as amended (the
“
Exchange
Ac
t”)
,
and the
officers, directors, agents and employees of such controlling person, to the
fullest extent permitted by applicable law, from and
against
all loss, claim, damage, expense or liability (including all reasonable
attorneys’ fees and other expenses reasonably incurred in investigating,
preparing or defending against litigation, commenced or threatened, or any
claim
whatsoever whether arising out of any action between the underwriter and the
Company or between the underwriter and any third party or otherwise) to which
any of them may become subject under the Act, the Exchange Act or otherwise,
arising out of or relating to such registration statement filed pursuant to
this
Section 5 and any prospectus contained in the registration statement or in
any
amendment or supplement thereto, except only to the same extent and with the
same effect as the provisions pursuant to which the Company has agreed to
indemnify the underwriters contained in Section 5.1 of the Underwriting
Agreement between the Company, Broadband and the other underwriters named
therein dated the Effective Date. Each Holder of the Registrable Securities
to
be sold pursuant to such registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, its officers
and directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
all loss, claim, damage, expense or liability (including all reasonable
attorneys’ fees and other expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns,
in
writing, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 5.2
of
the Underwriting Agreement pursuant to which the underwriters have agreed to
indemnify the Company.
5.3.2
Exercise
of Purchase Options
.
Nothing
contained in this Purchase Option shall be construed as requiring any Holder
to
exercise their Purchase Options or Warrants underlying such Purchase Options
prior to or after the filing of any registration statement or the effectiveness
thereof.
5.3.3
Documents
Delivered to Holders
.
The
Company shall furnish Broadband, as representative of the Holders participating
in any of the foregoing offerings, a signed counterpart, addressed to the
participating Holders, of (i) an opinion of counsel to the Company, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under any underwriting agreement related thereto), and (ii) a “cold
comfort” letter dated the effective date of such registration statement (and, if
such registration includes an underwritten public offering, a letter dated
the
date of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company’s financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement
(and
the prospectus included therein) and, in the case of such accountants’ letter,
with respect to events subsequent to the date of such financial statements,
as
are customarily covered in opinions of issuer’s counsel and in accountants’
letters delivered to underwriters in underwritten public offerings of
securities. The Company shall also deliver promptly to Broadband, as
representative of the Holders participating in the offering, the correspondence
and memoranda described below and copies of all correspondence between the
Commission and the Company, its counsel or auditors and all memoranda relating
to discussions with the Commission or its staff with respect to the registration
statement and permit Broadband, as representative of the Holders, to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the Financial
Industry Regulatory Authority, Inc. (“
FINRA
”).
Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable
times
and as often as Broadband, as representative of the Holders, shall reasonably
request. The Company shall not be required to disclose any confidential
information or other records to Broadband, as representative of the Holders,
or
to any other person, until and unless such persons shall have entered into
reasonable confidentiality agreements (in form and substance reasonably
satisfactory to the Company), with the Company with respect
thereto.
5.3.4
Documents
to be Delivered by Holder(s)
.
Each
Holder participating in any of the foregoing offerings shall furnish to the
Company a completed and executed questionnaire provided by the Company
requesting information customarily sought of selling
securityholders.
5.3.5
Underwriting
Agreement
.
The
Company shall enter into an underwriting agreement with the managing
underwriter(s), if any, selected by any Holders, whose Registrable Securities
are being registered pursuant to this Section 5, which managing underwriter
shall be reasonably acceptable to the Company. Such agreement shall be
reasonably satisfactory in form and substance to the Company and its legal
counsel, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms
as
are customarily contained in agreements of that type used by the managing
underwriter. The Holders shall be parties to any underwriting agreement relating
to an underwritten sale of their Registrable Securities and may, at their
option, require that any or all the representations, warranties and covenants
of
the Company to or for the benefit of such underwriters shall also be made to
and
for the benefit of such Holders. Such Holders shall not be required to make
any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution. Such Holders, however, shall agree to such covenants
and indemnification and contribution obligations for selling stockholders as
are
customarily contained in agreements of that type used by the managing
underwriter. Further, such Holders shall execute appropriate custody agreements
and otherwise cooperate fully in the preparation of the registration statement
and other documents relating to any offering in which they include securities
pursuant to this Section 5. Each Holder shall also furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities.
5.3.6
Rule
144 Sale
. Notwithstanding
anything contained in this Section 5 to the contrary, the Company shall have
no
obligation pursuant to Sections 5.1 or 5.2 for the registration of Registrable
Securities held by any Holder (i) where such Holder would then be entitled
to
sell under Rule 144 within any three month period (or such other period
prescribed under Rule 144 as may be provided by amendment thereof) all of the
Registrable Securities held by such Holder, and (ii) where the number of
Registrable Securities held by such Holder is within the volume limitations
under paragraph (e) of Rule 144 (calculated as if such Holder were an affiliate
within the meaning of Rule 144).
5.3.7
Supplemental
Prospectus
.
Each
Holder agrees, that upon receipt of any notice from the Company of the happening
of any event as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, such Holder will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder’s receipt of the copies of a supplemental or
amended prospectus, and, if so desired by the Company, such Holder shall deliver
to the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of such destruction) all copies, other than permanent
file
copies then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
6.
Adjustments
.
6.1
Adjustments
to Exercise Price and Number of Securities
.
The
Exercise Price and the number of Units underlying the Purchase Option shall
be
subject to adjustment from time to time as hereinafter set forth:
6.1.1
Stock
Dividends - Split-Ups
.
If
after the date hereof, the number of outstanding Ordinary Shares is increased
by
a stock dividend payable in Ordinary Shares or by a split-up of Ordinary Shares
or other similar event, then, on the effective date thereof, the number of
Ordinary Shares underlying each of the Units purchasable hereunder shall be
increased in proportion to such increase in outstanding shares. In such case,
the number of Ordinary Shares, and the exercise price applicable thereto,
underlying the Warrants underlying each of the Units purchasable hereunder
shall
be adjusted in accordance with the terms of the Warrants. For example, if the
Company declares a two-for-one stock dividend and at the time of such dividend
this Purchase Option is for the purchase of one Unit at $10.00 per whole Unit
(each Warrant underlying the Units is exercisable for $6.00 per share), upon
effectiveness of the dividend, this Purchase Option will be adjusted to allow
for the purchase of one Unit at $10.00 per Unit, each Unit entitling the holder
to receive two Ordinary Shares and two Warrants (each Warrant exercisable for
$3.00 per share).
6.1.2
Aggregation
of Shares
.
If
after the date hereof, the number of outstanding Ordinary Shares is decreased
by
a consolidation, combination or reclassification of Ordinary Shares or other
similar event, then, on the effective date thereof, the number of Ordinary
Shares underlying each of the Units purchasable hereunder shall be decreased
in
proportion to such decrease in outstanding shares. In such case, the number
of
Ordinary Shares, and the exercise price applicable thereto, underlying the
Warrants underlying each of the Units purchasable hereunder shall be adjusted
in
accordance with the terms of the Warrants.
6.1.3
Replacement
of Securities upon Reorganization, etc
.
In case
of any reclassification or reorganization of the outstanding Ordinary Shares
other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely
affects the par value of such Ordinary Shares, or in the case of any merger
or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation
and
that does not result in any reclassification or reorganization of the
outstanding Ordinary Shares), or in the case of any sale or conveyance to
another corporation or entity of the property of the Company as an entirety
or
substantially as an entirety in connection with which the Company is dissolved,
the Holder of this Purchase Option shall have the right thereafter (until the
expiration of the right of exercise of this Purchase Option) to receive upon
the
exercise hereof, for the same aggregate Exercise Price payable hereunder
immediately prior to such event, the kind and amount of shares of stock or
other
securities or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or transfer, by a Holder of the number of Ordinary Shares of the
Company obtainable upon exercise of this Purchase Option and the underlying
Warrants immediately prior to such event; and if any reclassification also
results in a change in Ordinary Shares covered by Section 6.1.1 or 6.1.2, then
such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section
6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
6.1.4
Changes
in Form of Purchase Option
.
This
form of Purchase Option need not be changed because of any change pursuant
to
this Section, and the Purchase Options issued after such change may state the
same Exercise Price and the same number of Units as are stated in the Purchase
Options initially issued pursuant to this Agreement. The acceptance by any
Holder of the issuance of new Purchase Options reflecting a required or
permissive change shall not be deemed to waive any rights to an adjustment
occurring after the Commencement Date or the computation thereof.
6.2
Substitute
Purchase Option
.
In case
of any consolidation of the Company with, or merger of the Company with, or
merger of the Company into, another corporation (other than a consolidation
or
merger which does not result in any reclassification or change of the
outstanding Ordinary Shares), the corporation formed by such consolidation
or
merger shall execute and deliver to the Holder a supplemental Purchase Option
providing that the holder of each Purchase Option then outstanding or to be
outstanding shall have the right thereafter (until the stated expiration of
such
Purchase Option) to receive, upon exercise of such Purchase Option, the kind
and
amount of shares of stock and other securities and property receivable upon
such
consolidation or merger, by a holder of the number of Ordinary Shares of the
Company for which such Purchase Option might have been exercised immediately
prior to such consolidation, merger, sale or transfer. Such supplemental
Purchase Option shall provide for adjustments which shall be identical to the
adjustments provided in Section 6. The above provision of this Section shall
similarly apply to successive consolidations or mergers.
6.3
Elimination
of Fractional Interests
.
The
Company shall not be required to issue certificates representing fractions
of
Ordinary Shares or Warrants upon the exercise of the Purchase Option, nor shall
it be required to issue scrip or pay cash in lieu of any fractional interests,
it being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up or down to the nearest whole number
of
Warrants, Ordinary Shares or other securities, properties or
rights.
7.
Reservation
and Listing
.
The
Company shall at all times reserve and keep available out of its authorized
Ordinary Shares, solely for the purpose of issuance upon exercise of the
Purchase Options or the Warrants underlying the Purchase Option, such number
of
Ordinary Shares or other securities, properties or rights as shall be issuable
upon the exercise thereof. The Company covenants and agrees that, upon exercise
of the Purchase Options and payment of the Exercise Price therefor, all Ordinary
Shares and other securities issuable upon such exercise shall be duly and
validly issued, fully paid and non-assessable and not subject to preemptive
rights of any stockholder. The Company further covenants and agrees that upon
exercise of the Warrants underlying the Purchase Options and payment of the
respective Warrant exercise price therefor, all Ordinary Shares and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder.
As long as the Purchase Options shall be outstanding, the Company shall use
its
best efforts to cause all (i) Units and Ordinary Shares issuable upon exercise
of the Purchase Options, (ii) Warrants issuable upon exercise of the Purchase
Options and (iii) Ordinary Shares issuable upon exercise of the Warrants
included in the Units issuable upon exercise of the Purchase Option to be listed
(subject to official notice of issuance) on all securities exchanges (or, if
applicable on the Nasdaq Global Market, Nasdaq Capital Market, FINRA OTC
Bulletin Board or any successor trading market) on which the Units, the Ordinary
Shares or the Warrants may then be listed and/or quoted.
8.
Certain
Notice Requirements
.
8.1
Holder’s
Right to Receive Notice
.
Nothing
herein shall be construed as conferring upon the Holders the right to vote
or
consent as a stockholder for the election of directors or any other matter,
or
as having any rights whatsoever as a stockholder of the Company. If, however,
at
any time prior to the expiration of the Purchase Options and their exercise,
any
of the events described in Section 8.2 shall occur, then, in one or more of
said
events, the Company shall give written notice of such event at least fifteen
(15) days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such
dividend, distribution, conversion or exchange of securities or subscription
rights, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of the
closing of the transfer books, as the case may be. Notwithstanding the
foregoing, the Company shall deliver to each Holder a copy of each notice given
to the other stockholders of the Company at the same time and in the same manner
that such notice is given to the stockholders.
8.2
Events
Requiring Notice
.
The
Company shall be required to give the notice described in this Section 8 upon
one or more of the following events: (i) if the Company shall take a record
of
the holders of its Ordinary Shares for the purpose of entitling them to receive
a dividend or distribution, or (ii) the Company shall offer to all the holders
of its Ordinary Shares any additional shares of capital stock of the Company
or
securities convertible into, exercisable for or exchangeable for shares of
capital stock of the Company, or any option, right or warrant to subscribe
therefor, or (iii) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all
or
substantially all of its property, assets and business or a merger of the
Company wherein the separate existence of the Company shall cease shall be
proposed.
8.3
Notice
of Change in Exercise Price
.
The
Company shall, promptly after an event requiring a change in the Exercise Price
pursuant to Section 6 hereof, send notice to the Holders of such event and
change (a “
Price
Notice
”).
The
Price Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company’s President and Chief Financial Officer.
8.4
Transmittal
of Notices
.
All
notices, requests, consents and other communications under this Purchase Option
shall be in writing and shall be deemed to have been duly made when hand
delivered, mailed by express mail or private courier service, or sent by
facsimile transmission, with confirmation of receipt: (i) If to the registered
Holder of the Purchase Option, to the address and/or fax number of such Holder
as shown on the books of the Company, or (ii) if to the Company, to the
following address or fax number or to such other address or and fax number
as
the Company may designate by notice to the Holders:
Hambrecht
Asia Acquisition Corp.
388
Nanjing Xi Lu
Floor
23,
Room 2308
200003
Shanghai, China
Attn:
[John Wang]
Fax
No.:
_______________________
9.1
Amendments
.
The
Company and Broadband may from time to time supplement or amend this Purchase
Option without the approval of any of the Holders in order to cure any
ambiguity, to correct or supplement any provision contained herein that may
be
defective or inconsistent with any other provisions herein, or to make any
other
provisions in regard to matters or questions arising hereunder that the Company
and Broadband may deem necessary or desirable and that the Company and Broadband
deem shall not adversely affect the interest of the Holders. All other
modifications or amendments shall require the written consent of and be signed
by the party against whom enforcement of the modification or amendment is
sought.
9.2
Headings
.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Purchase Option.
9.3.
Entire
Agreement
.
This
Purchase Option (together with the other agreements and documents being
delivered pursuant to or in connection with this Purchase Option) constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
9.4
Binding
Effect
.
This
Purchase Option shall inure solely to the benefit of and shall be binding upon,
the Holder and the Company and their permitted assignees, respective successors,
legal representative and assigns, and no other person shall have or be construed
to have any legal or equitable right, remedy or claim under or in respect of
or
by virtue of this Purchase Option or any provisions herein
contained.
9.5
Governing
Law; Submission to Jurisdiction
.
This
Purchase Option shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflict of
laws. Each of the Company and Broadband agree that any action, proceeding or
claim against it arising out of, or relating in any way to this Purchase Option
shall be brought and enforced in the courts of the State of New York located
in
New York County or of the United States of America for the Southern District
of
New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall
be exclusive. Each of the Company and Broadband hereby waives any objection
to
such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
8 hereof. Such mailing shall be deemed personal service and shall be legal
and
binding upon the Company in any action, proceeding or claim. The Company and
the
Holder agree that the prevailing party(ies) in any such action shall be entitled
to recover from the other party(ies) all of its reasonable attorneys’ fees and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
9.6
Waiver,
Etc
.
The
failure of the Company or the Holder to at any time enforce any of the
provisions of this Purchase Option shall not be deemed or construed to be a
waiver of any such provision, nor to in any way affect the validity of this
Purchase Option or any provision hereof or the right of the Company or any
Holder to thereafter enforce each and every provision of this Purchase Option.
No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Purchase Option shall be effective unless set forth in a
written instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such breach,
non-compliance or non-fulfillment shall be construed or deemed to be a waiver
of
any other or subsequent breach, non-compliance or non-fulfillment.
9.7
Execution
.
It is
agreed that deliver of the Company’s signature hereon by facsimile or other
electronic method of delivery shall constitute a valid signature and
delivery.
9.8
Exchange
Agreement
.
As a
condition of the Holder’s receipt and acceptance of this Purchase Option, Holder
agrees that, at any time prior to the complete exercise of this Purchase Option
by Holder, if the Company and Broadband enter into an agreement (an
“
Exchange
Agreement
”)
pursuant to which they agree that all outstanding Purchase Options will be
exchanged for securities or cash or a combination of both, then Holder shall
agree to such exchange and become a party to the Exchange
Agreement.
9.9
Underlying
Warrants
.
At any
time after exercise by the Holder of this Purchase Option, the Holder may
exchange his Warrants for Public Warrants upon payment to the Company of the
difference between the exercise price of his Warrant and the exercise price
of
the Public Warrants, if any.
IN
WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by
its
duly authorized officer as of the
___
day of
,
2008.
HAMBRECHT
ASIA ACQUISITION CORP.
By:
_________________________________
Name:
Title:
Annex
I
Form
to
be used to exercise Purchase Option
HAMBRECHT
ASIA ACQUISITION CORP.
_________________________
_________________________
Date:_________________,
200__
The
undersigned hereby elects irrevocably to exercise all or a portion of the within
Purchase Option and to purchase ____ Units of Hambrecht Asia Acquisition Corp.
and hereby makes payment of $____________ (at the rate of $_________ per Unit)
in payment of the Exercise Price pursuant thereto. Please issue the Ordinary
Shares and Warrants as to which this Purchase Option is exercised in accordance
with the instructions given below.
or
The
undersigned hereby elects irrevocably to convert its right to purchase _________
Units purchasable under the within Purchase Option by surrender of the
unexercised portion of the attached Purchase Option (with a “Value” based of
$_______ based on a “Market Price” of $_______). Please issue the securities
comprising the Units as to which this Purchase Option is exercised in accordance
with the instructions given below.
________________________
Signature
________________________
Signature
Guaranteed
INSTRUCTIONS
FOR REGISTRATION OF SECURITIES
Name_____________________________________________________________
(Print
in
Block Letters)
Address__________________________________________________________
NOTICE:
THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, OTHER
THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING MEMBERSHIP ON
A
REGISTERED NATIONAL SECURITIES EXCHANGE.
Annex
II
Form
to
be used to assign Purchase Option
ASSIGNMENT
(To
be
executed by the registered Holder to effect a transfer of the within Purchase
Option):
FOR
VALUE
RECEIVED,___________________________________________ does hereby sell, assign
and transfer unto______________________________________ the right to purchase
__________ Units of Hambrecht Asia Acquisition Corp. (the “
Company
”)
evidenced by the within Purchase Option and does hereby authorize the Company
to
transfer such right on the books of the Company.
Dated:___________________,
200_
______________________
Signature
______________________
Signature
Guaranteed
NOTICE:
THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, OTHER
THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING MEMBERSHIP ON
A
REGISTERED NATIONAL SECURITIES EXCHANGE.
|
Hambrecht
Asia Acquisition Corporation
|
DIRECT
LINE:
|
2842
9556
|
|
Cricket
Square
|
E-MAIL:
|
christopher.bickley@conyersdillandpearman.com
|
|
Hutchins
Drive
|
OUR
REF:
|
CWHBik11259827
(M#871806)
|
|
P.O.
Box 2681
|
YOUR
REF:
|
|
|
Grand
Cayman KYl-1111
|
|
|
|
Cayman
Islands
|
|
|
Dear
Sirs,
Hambrecht
Asia Acquisition Corporation (the "Company")
We
have
acted as special Cayman legal counsel to the Company in connection with an
initial public offering of (i) 4,000,000 units (the "Units"), with each Unit
consisting of one ordinary share, par value US$O.Ol per share (the "Shares"),
and redeemable warrants (the "Warrants") to purchase one Share ("Warrant
Shares") to the underwriters (the "Underwriters"), (ii) up to 600,000 Units
(the
"Over-Allotment Units") which the Underwriters will have a right to purchase
from the Company to cover over-allotments, if any, (iii) up to 280,000 Units
which the Underwriters will have the right to purchase (the "Purchase Option
Units"), (iv) all Shares and all Warrants issued as part of the Units,
Over-Allotment Units and Purchase Option Units and (v) all Shares issuable
upon
exercise of the Warrants included in the Units and Over-Allotment Units as
described in the prospectus contained in the registration statement on Form
F-1
filed with the United States Securities and Exchange Commission (the
"Registration Statement").
For
the
purposes of giving this opinion, we have examined and relied upon copies of
the
following documents:
|
(i)
|
the
Registration Statement to be filed by the Company under the United
States
Securities Act of 1933, as amended (the "Securities Act") with the
United
States Securities and Exchange Commission (the "Commission") on or
about
30 January, 2008 as amended;
|
|
(ii)
|
a
draft of the prospectus (the "Prospectus") contained in the Registration
Statement;
|
|
(iii)
|
a
draft of the warrant agreement and the warrant certificate (the "Warrant
Documents") constituting the Warrants;
and
|
Bermuda
British Virgin Islands Cayman lslands Dubai Hong
Kong London Singapore
Advising
on
the
jurisdictions
of Bermuda, British Virgin Islands
and
Cayman
Islands
|
Hambrecht
Asia Acquisition Corporation
|
|
|
|
30
January,
2008
|
|
|
|
Page
2
|
|
|
|
(iv)
|
drafts
of the unit certificates (the "Unit Certificates") constituting the
Units,
the Over-Allotment Units and the Purchase Option
Units.
|
We
have
also reviewed and relied upon (1) the memorandum of association and the articles
of association of the Company, (2) copies of the minutes of meetings and written
resolutions passed by directors of the Company both dated 29 January, 2008
(the
"Minutes"),
(3)
the
register of members of the Company, (4) a certificate of good standing issued
by
the Cayman Islands Registrar of Companies on 19 December, 2007 (the "Certificate
Date") and (5) such other documents and made such enquiries as to questions
of
law as we have deemed necessary in order to render the opinion set forth below.
We
have
assumed (i) the genuineness and authenticity of all signatures, stamps and
seals
and the conformity to the originals of all copies of documents (whether or
not
certified) examined by us and the authenticity and completeness of the originals
from which such copies were taken; (ii) the accuracy and completeness of all
factual representations made in the Prospectus and Registration Statement and
other documents reviewed by us, (iii) that the resolutions contained in the
Minutes are full and accurate records of resolutions passed at meetings duly
convened and held by the directors and shareholders of the Company in accordance
with the articles of association of the Company and that such resolutions have
not been amended or rescinded and remain in full force and effect; (iv) that
there is no provision of the law of any jurisdiction, other than the Cayman
Islands, which would have any implication in relation to the opinions expressed
herein; (v) the validity and binding effect under the laws of the United States
of America of the Registration Statement and the Prospectus and that the
Registration Statement will be duly filed with or declared effective by the
Commission; (vi) that the Unit Certificates will be governed by the laws of
the
State of New York and the validity and binding effect under the laws of the
State of New York of the Warrant Documents and the Unit Certificates; and (vii)
that the Prospectus, when published, will be in substantially the same form
as
that examined by us for purposes of this opinion.
The
obligations of the Company under the Warrant Documents and the Unit Certificates
(a) will be subject to the laws from time to time in effect relating to
bankruptcy, insolvency, liquidation, possessory liens, rights of set off,
reorganisation, amalgamation, moratorium or any other laws or legal procedures,
whether of a similar nature or otherwise, generally affecting the rights
of
creditors;
(b)
will
be
subject to statutory limitation of the time within which proceedings may
be
brought; (c) will be subject to general principles of equity and, as such,
specific performance and injunctive relief, being equitable remedies, may
not be
available; (d) may not be given effect to by a Cayman Islands court, whether
or
not it was applying the laws of the State of New York, if and to the extent
they
constitute the payment of an amount which is in the nature of a penalty and
not
in the nature of liquidated damages. Notwithstanding any contractual submission
to the jurisdiction of specific courts, a Cayman Islands court has
inherent
discretion to stay or allow proceedings in the Cayman Islands against the
Company under the Warrant Documents and the Unit Certificates if there are
other
in respect of those Warrant Documents and the Unit Certificates simultaneously
underway against the Company in another jurisdiction.
|
Hambrecht
Asia Acquisition Corporation
|
|
|
|
30
January,
2008
|
|
|
|
Page
3
|
|
|
We
express no opinion as to validity or the binding effect of obligations to
make
any payment at an increased rate on overdue amounts or on the happening of
an
event or default or to pay a specified rate or interest on the amount of
a
judgment after the date of judgement.
In
addition,
any provision expressly or impliedly providing that certain statements,
calculations and/or certificates are incorrect on their face or fraudulent
will
not necessarily preventjudicial enquiry into the merits of a claim of an
aggrieved party.
We
have
made no investigation of and express no opinion in relation to the laws of
any
jurisdiction other than the Cayman Islands. This opinion is to be governed
by
and construed in accordance with the laws of the Cayman Islands and is limited
to and is given on the basis of the current law and practice in the Cayman
Islands.
On
the
basis of and subject to the foregoing, we are of the opinion that:
|
1.
|
As
at the Certificate Date, the Company is duly incorporated and existing
under the laws of the Cayman Islands in good standing (meaning
solely that
it has not failed to make any filing with any Cayman Islands government
authority or to pay any Cayman Islands government fee which would
make it
liable to be struck off by the Registrar of Companies and thereby
cease to
exist under the laws of the Cayman Islands).
|
|
2.
|
The
issue of the Units, Over-Allotment Units, Puchase Option Units,
Shares and
Warrant Shares have been duly authorised, and when the Shares have
been
issued, delivered and paid for in the manner described in and pursuant
to
the terms of the Prospectus and Registration Statement will be
validly
issued, fully paid and non-assessable (meaning that no further
sums are
payable to the Company with respect to the holding of such Shares).
|
|
3.
|
When
duly executed and delivered by or on behalf of the Company, the
Warrant
Documents and the Unit Certificates will constitute the valid and
binding
obligations of the Company in accordance with their respective
terms
thereof.
|
|
Hambrecht
Asia Acquisition Corporation
|
|
|
|
30
January,
2008
|
|
|
|
Page
4
|
|
|
We
hereby
consent to the filing of this opinion with the Commission as an exhibit to
the
Registration Statement and to the references to us under the headings "Taxation"
and "Legal Matters" in the Prospectus contained in the Registration Statement.
In giving such consent, we do not thereby admit that we come within the category
of persons whose consent is required
under
Section
7
of
the
Securities Act, or the Rules and Regulations of the Commission thereunder.
Yours
faithfully,
CONYERS
DILL & PEARMAN
January
31, 2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Ladies
and Gentlemen:
Reference
is made to Amendment No. 3 on Form S-1 to Form F-1 Registration Statement
(the
“Registration Statement”) filed with the Securities and Exchange Commission by
Hambrecht Asia Acquisition Corp., a Cayman Islands company (the “Company”),
under the Securities Act of 1933, as amended (the “Act”), covering an
underwritten public offering of (i) 4,000,000 Units, with each Unit consisting
of one of the Company’s ordinary shares, par value $.001 per share (the
“Ordinary Shares”), and one warrant, each to purchase one share of the Company’s
Ordinary Shares (the “Warrants”), (ii) up to 600,000 Units (the “Over-Allotment
Units”) for which the underwriters have been granted an over-allotment option,
(iii) up to 280,000 units ("Purchase Option Units") which Broadband Capital
Management LLC, the representative of the underwriters, will have the right
to
purchase for its own account or that of its designees, (iv) all Ordinary
Shares
and all Warrants issued as part of the Units, Over-Allotment Units and
the
Purchase Option Units and (v) all Ordinary Shares issuable upon exercise
of the
Warrants included in the Units, Over-Allotment Units and the Purchase Option
Units.
We
have
examined such documents and considered such legal matters as we have deemed
necessary and relevant as the basis for the opinion set forth below. With
respect to such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as reproduced or
certified copies, and the authenticity of the originals of those latter
documents. As to questions of fact material to this opinion, we have, to
the
extent deemed appropriate, relied upon certain representations of certain
officers of the Company. Because the Warrant Agreement and the Warrants
are
governed by New York law, we are rendering this opinion as to New York
law. We
are admitted to practice in the State of New York, and we express no
Los
Angeles New York Chicago Nashville
www.loeb.com
A
limited
liability partnership including professional
corporations
opinion
as to any matters governed by any law other than the law of the State
of New
York. In particular, we do not purport to pass on any matter governed
by the
laws of the Cayman Islands.
Based
upon the foregoing, we are of the opinion that each of the Warrants (including
the Warrants issuable in connection with the Over-Allotment Units and
the
Purchase Option Units), if and when paid for in accordance with the terms
of the
underwriting agreement between the Company and the representative of
the
underwriters (the “Underwriting Agreement”) constitutes the valid and legally
binding obligation of the Company, enforceable against it in accordance
with its
terms.
In
addition, the foregoing opinions are qualified to the extent that (a)
enforceability may be limited by and be subject to general principles
of equity,
regardless of whether such enforceability is considered in a proceeding
in
equity or at law (including, without limitation, concepts of notice and
materiality), and by bankruptcy, insolvency, reorganization, moratorium
and
other similar laws affecting creditors’ and debtors’ rights generally
(including, without limitation, any state or federal law in respect of
fraudulent transfers); (b) no opinion is expressed herein as to compliance
with
any federal or state consumer protection or antitrust laws, rules, or
regulations, or any municipal or local laws and ordinances; (c) no opinion
is
expressed herein as to the enforceability of the indemnification provisions
contained in any agreement, to the extent such provisions may be unenforceable
under federal or state securities laws; (d) no opinion is expressed herein
as to
compliance with or the effect of federal or state securities or blue
sky laws;
(e) no opinion is expressed herein as to federal and state laws, regulations
and
policies concerning (i) a national or local emergency, (ii) possible
judicial
deference to acts of sovereign states, (iii) civil and criminal forfeiture
laws,
(iv) conscionability or other provisions that might violate public policy
or (v)
usury; and (f) no opinion is expressed herein as to (i) survivability
or
severability provisions, (ii) any provision purporting to make oral
modifications will be unenforceable or which limits the applicability
of the
doctrine of promissory estoppel, (iii) choice of law or venue provisions,
(iv)
any provision that prohibits assignment by operation of law or in any
other
respect that may be deemed unreasonable under the circumstances, or (v)
any
arbitration provisions.
We
hereby
consent to the use of this opinion as an exhibit to the Registration
Statement,
to the use of our name as your U.S. counsel and to all references made
to us in
the Registration Statement and in the prospectus forming a part thereof.
In
giving this consent, we do not hereby admit that we are in the category
of
persons whose consent is required under Section 7 of the Act, or the
rules and
regulations promulgated thereunder.
|
Very
truly
yours,
|
|
|
|
|
|
|
|
/s/ Loeb & Loeb LLP
|
|
|
Loeb
&
Loeb
LLP
|
|
Exhibit
10.1
________,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management, Inc.
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a shareholder, officer and director of Hambrecht Asia Acquisition
Corp. (the “Company”), in consideration of Broadband Capital Management,
Inc.(“Broadband”) entering into a letter of intent, dated
[ ], 2007 (“Letter of
Intent”), to underwrite an initial public offering (“IPO”) of the securities of
the Company and embarking on, undertaking and continuing to participate in
the
IPO process, hereby agrees as follows (certain capitalized terms used herein
are
defined in paragraph XII hereof):
I.
(1)
In
the
event that the Company fails to consummate a Business Combination within 18,
24
or 36 months, as the case may be, from the effective date (the “Effective Date”)
of the registration statement relating to the IPO, the undersigned shall, in
accordance with all applicable requirements of the Cayman Islands laws, take
all
action reasonably within his power to dissolve the Company and distribute all
funds held in the Trust Account to holders of the IPO Shares as soon as
reasonably practicable including, without limitation, (i) causing the Company’s
board of directors to convene and adopt a plan of dissolution and liquidation
and (ii) voting, as a director (if applicable), in favor of adopting such plan
of dissolution and liquidation.
(2)
Except
with respect to any of the IPO Shares acquired by the undersigned in connection
with or following the IPO, the undersigned hereby (a) waives any and all right,
title, interest or claim of any kind (a “Claim”) in or to all funds in the Trust
Account and any remaining net assets of the Company upon liquidation of the
Trust Account and dissolution of the Company, (b) waives any Claim the
undersigned may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and (c) agrees that the undersigned
will not seek recourse against the Trust Account for any reason
whatsoever.
(3)
The
undersigned agrees to indemnify and hold harmless the Company against any and
all loss, liability, claims, damage and expense whatsoever (including, but
not
limited to, any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, whether pending
or
threatened, or any claim whatsoever) to which the Company may become subject
as
a result of any claim by any vendor, prospective or actual target business,
creditor or other entity that is owed money by the Company for services rendered
or products sold to the Company or the claims of any prospective or actual
target businesses, subject to the following limitations: (i) such
indemnification will only be made insofar as the Company did not obtain a
validly enforceable waiver from such party of such party’s rights or claims to
the Trust Account, (ii) such indemnification will be made only to the extent
necessary to ensure that such loss, liability, claim, damage or expense does
not
reduce the amount in the Trust Account below the amount necessary in order
for
each holder of IPO Shares to receive a liquidation amount of at least $7.60
per
IPO Share owned by such holder, and (iii) such indemnity shall be limited to
the
extent of the undersigned’s pro rata beneficial ownership of the Company
immediately prior to the IPO.
II.
In
order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees: (A) not to become an officer or director
of any blank check company which may acquire a business in the People’s Republic
of China until the earlier of the announcement of a Business Combination or
the
Company’s dissolution and liquidation and (B) to present to the Company for its
consideration, prior to presentation to any other person or entity, any suitable
opportunity to acquire an operating business until the earlier of: (i) the
consummation by the Company of a Business Combination, (ii) the dissolution
of
the Company or (iii) such time as the undersigned ceases to be a director of
the
Company, subject to any pre-existing fiduciary and contractual obligations
the
undersigned might have. Such pre-existing fiduciary or contractual obligations
are described more fully in Exhibit A hereto.
III.
The
undersigned acknowledges and agrees that the Company will not consummate any
Business Combination with a company affiliated with any of the Insiders or
their
respective affiliates or a company that is either a portfolio company of, or
has
otherwise received a financial investment from, our founders or their
affiliates. In addition, the undersigned acknowledges and agrees that the
Company will not enter into a Business Combination with any underwriters or
selling group members or any of their affiliates, unless the Company obtains
an
opinion from an unaffiliated, independent investment banking firm which is
a
member of the National Association of Securities Dealers, Inc. that a Business
Combination with such target business is fair to the Company’s shareholders from
a financial point of view.
IV.
(1)
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
affiliate of the undersigned (“Affiliate”) will be entitled to receive, and no
such person will accept, any compensation for services rendered to the Company
prior to, or in connection with, the consummation of a Business Combination;
provided, however, that the undersigned shall be entitled to reimbursement
from
the Company for his out-of-pocket expenses incurred in connection with seeking
and consummating a Business Combination.
V.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
Affiliate of the undersigned will be entitled to receive or accept a finder’s
fee or any other compensation in the event the undersigned, any member of the
Immediate Family of the undersigned or any Affiliate originates a Business
Combination.
VI.
(1)
The
undersigned agrees to be the Chief Executive Officer, President and a director
of the Company until the earlier of the consummation of a Business Combination
or the dissolution and liquidation of the Company. The undersigned agrees not
to
resign (or advise the board of directors that the undersigned declines to seek
re-election to the board of directors) from his position as officer and director
of the Company as set forth in the Registration Statement without the prior
consent of Broadband until the earlier of the consummation by the Company of
a
Business Combination or dissolution of the Company and liquidation of the Trust
Account. The undersigned acknowledges that the foregoing does not interfere
with
or limit in any way the right of the Company to terminate the undersigned’s
positions at any time (subject to other contractual rights the undersigned
may
have) nor confer upon the undersigned any right to continue in his positions
with the Company.
(2)
The
undersigned’s biographical information furnished to the Company and Broadband
and attached hereto as Exhibit B is true and accurate in all respects, does
not
omit any material information with respect to the undersigned’s background and
contains all of the information required to be disclosed pursuant to Item 401
of
Regulation S-K, promulgated under the Securities Act of 1933, as amended. The
undersigned’s Questionnaire previously furnished to the Company and Broadband is
true and accurate in all respects as of the date first written
above.
(3)
The
undersigned represents and warrants that:
(a)
he
is not
subject to or a respondent in any legal action for any injunction relating
to,
or any cease and desist order or order or stipulation to desist or refrain
from
any act or practice relating to the offering to the offering of securities
in
any jurisdiction;
(b)
No
petition under the Federal bankruptcy laws or any state insolvency law has
been
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of the undersigned, or any
partnership in which the undersigned was or is a general partner at or within
two years prior to the date hereof, or any corporation or business association
of which the undersigned was an executive officer at or within two years prior
to the date hereof;
(c)
He
has
never been convicted of or plead guilty to any crime (i) involving any fraud
or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he has not
plead guilty to or been convicted in any criminal proceeding nor is the
undersigned currently a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(d)
The
undersigned has not been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining the undersigned from, or
otherwise limiting, the following activities:
(e)
Acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker
or dealer in securities, or as an affiliated person, director or employee of
any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity;
(f)
Engaging
in any type of business practice; or
(g)
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws;
VII.
The
undersigned has full right and power, without violating any agreement by which
he is bound, to enter into this letter agreement and to serve as Chief Executive
Officer, President and a director of the board of directors of the
Company.
VIII.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon the agreements, representations and warranties set forth herein in
proceeding with the IPO.
IX.
The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Broadband and the Company and their respective
legal representatives or agents (including any investigative search firm
retained by Broadband or the Company) any information they may have about the
undersigned’s background and finances (the “Information”). Neither Broadband nor
the Company nor their respective agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
X.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that he will vote all Ordinary Shares owned by him prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
XI.
The
undersigned will escrow his Insider Shares for the period commencing on the
Effective Date and ending one year after the consummation of a Business
Combination, subject to the terms of a Share Escrow Agreement which the Company
will enter into with the undersigned and an escrow agent acceptable to the
Company.
XII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against him arising out of or relating in any way to this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right of
either party to serve process in any other manner permitted by law.
XIII.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Immediate Family” shall mean, with respect to any person, such person’s spouse,
children, parents and siblings (including any such relative by adoption or
marriage); (iv) “Insiders” shall mean all officers, directors and shareholders
of the Company immediately prior to the IPO; (v) “Insider Shares” shall mean all
of the Ordinary Shares owned by an Insider prior to the IPO; (vi) “IPO Shares”
shall mean the Ordinary Shares issued in the Company’s IPO; and (vii) “Trust
Account” shall mean the trust account in which most of the proceeds to the
Company of the IPO will be deposited and held for the benefit of the holders
of
the IPO shares, as described in greater detail in the prospectus relating to
the
IPO.
XIV.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
|
|
_________________________________
John Wang
|
EXHIBIT
A
[PROVIDE
LIST OF PRIOR FIDUCIARY/CONTRACTUAL OBLIGATIONS]
EXHIBIT
B
[
ATTACH
UPDATED BIOS FOR EACH]
John
Wang
has been
our Chief Executive Officer, President and a director since [•], 2007. Mr. Wang
has over twelve years of investment banking and consulting experience. He helped
develop and establish the U.S. operations of SBI USA as Executive Vice President
of SBI E2-Capital (HK) Limited and was a Managing Director and Chief Operating
Officer of SBI E2-Capital (USA) Ltd. Prior to SBI, he managed Accenture
Consulting’s Greater China communications, media, and high tech strategy
practice, where he acted as consultant to China Mobile’s IPO in 1997, among
other high profile projects. He was also the lead telecom analyst covering
Greater China and Southeast Asia for Pyramid Research, a Cambridge Massachusetts
based emerging market telecom research firm that is part of the Economist
Intelligence Unit. Mr. Wang is currently the Managing Director of Marbella
Capital Partners, a financial advisory firm based in Shanghai which focuses
on
private equity investment opportunities in Chinese companies across all sectors.
Last year, he closed four late-stage deals, of which one has already gone public
in Hong Kong and another, Tian Wei Yingli Solar, completed its IPO and listing
on the New York Stock Exchange on June 8, 2007. Mr. Wang currently sits on
the
Board of Hong Kong Stock Exchange listed Wuyi Pharma (HKSE: 1889) and Tongda
Energy, a Shanghai-based privately held natural gas company with operations
in
11 cities across China. Mr. Wang holds a Bachelor of Arts degree in
international relations from Tufts University and is a graduate of the
Washington International Studies Program at St. Catherine’s College at Oxford
University. He has an M.A.L.D. in international law and business from The
Fletcher School of Law and Diplomacy and is a graduate of the Private Equity
course at Harvard Business School.
Exhibit
10.2
_________,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a shareholder, officer and director of Hambrecht Asia Acquisition
Corp. (the “Company”), in consideration of Broadband Capital Management
LLC(“Broadband”) entering into a letter of intent, dated
[
], 2007 (“Letter of Intent”), to underwrite an initial public offering (“IPO”)
of the securities of the Company and embarking on, undertaking and continuing
to
participate in the IPO process, hereby agrees as follows (certain capitalized
terms used herein are defined in paragraph XII hereof):
I.
(1) In the event that the Company fails to consummate a Business
Combination within 18, 24 or 36 months, as the case may be, from the effective
date (the “Effective Date”) of the registration statement relating to the IPO,
the undersigned shall, in accordance with all applicable requirements of the
Cayman Islands laws, take all action reasonably within his power to dissolve
the
Company and distribute all funds held in the Trust Account to holders of the
IPO
Shares as soon as reasonably practicable including, without limitation, (i)
causing the Company’s board of directors to convene and adopt a plan of
dissolution and liquidation and (ii) voting, as a director (if applicable),
in
favor of adopting such plan of dissolution and liquidation.
(2)
Except
with respect to any of the IPO Shares acquired by the undersigned in connection
with or following the IPO, the undersigned hereby (a) waives any and all right,
title, interest or claim of any kind (a “Claim”) in or to all funds in the Trust
Account and any remaining net assets of the Company upon liquidation of the
Trust Account and dissolution of the Company, (b) waives any Claim the
undersigned may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and (c) agrees that the undersigned
will not seek recourse against the Trust Account for any reason
whatsoever.
(3)
The
undersigned agrees to indemnify and hold harmless the Company against any and
all loss, liability, claims, damage and expense whatsoever (including, but
not
limited to, any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, whether pending
or
threatened, or any claim whatsoever) to which the Company may become subject
as
a result of any claim by any vendor, prospective or actual target business,
creditor or other entity that is owed money by the Company for services rendered
or products sold to the Company or the claims of any prospective or actual
target businesses, subject to the following limitations: (i) such
indemnification will only be made insofar as the Company did not obtain a
validly enforceable waiver from such party of such party’s rights or claims to
the Trust Account, (ii) such indemnification will be made only to the extent
necessary to ensure that such loss, liability, claim, damage or expense does
not
reduce the amount in the Trust Account below the amount necessary in order
for
each holder of IPO Shares to receive a liquidation amount of at least $7.60
per
IPO Share owned by such holder, and (iii) such indemnity shall be limited to
the
extent of the undersigned’s pro rata beneficial ownership of the Company
immediately prior to the IPO.
II.
In
order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees: (A) not to become an officer or director
of any blank check company which may acquire a business in the People’s Republic of China until the earlier of the announcement of a Business
Combination or the Company’s dissolution and liquidation and (B) to present to
the Company for its consideration, prior to presentation to any other person
or
entity, any suitable opportunity to acquire an operating business, until the
earlier of: (i) the consummation by the Company of a Business Combination,
(ii)
the dissolution of the Company or (iii) such time as the undersigned ceases
to
be a director of the Company, subject to any pre-existing fiduciary and
contractual obligations the undersigned might have. Such pre-existing fiduciary
or contractual obligations are described more fully in Exhibit A
hereto.
III.
The
undersigned acknowledges and agrees that the Company will not consummate any
Business Combination with a company affiliated with any of the Insiders or
their
respective affiliates or a company that is either a portfolio company of, or
has
otherwise received a financial investment from, our founders or their
affiliates. In addition, the undersigned acknowledges and agrees that the
Company will not enter into a Business Combination with any underwriters or
selling group members or any of their affiliates, unless the Company obtains
an
opinion from an unaffiliated, independent investment banking firm which is
a
member of the National Association of Securities Dealers, Inc. that a Business
Combination with such target business is fair to the Company’s shareholders from
a financial point of view.
IV. (1) Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
affiliate of the undersigned (“Affiliate”) will be entitled to receive, and no
such person will accept, any compensation for services rendered to the Company
prior to, or in connection with, the consummation of a Business Combination;
provided, however, that the undersigned shall be entitled to reimbursement
from
the Company for his out-of-pocket expenses incurred in connection with seeking
and consummating a Business Combination.
V.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
Affiliate of the undersigned will be entitled to receive or accept a finder’s
fee or any other compensation in the event the undersigned, any member of the
Immediate Family of the undersigned or any Affiliate originates a Business
Combination.
VI.
(1) The undersigned agrees to be the Chairman, a director of the board of
directors of the Company and Secretary of the Company until the earlier of
the
consummation of a Business Combination or the dissolution and liquidation of
the
Company. The undersigned agrees to not to resign (or advise the board of
directors that the undersigned declines to seek re-election to the board of
directors) from his position as officer and director of the Company as set
forth
in the Registration Statement without the prior consent of Broadband until
the
earlier of the consummation by the Company of a Business Combination or
dissolution of the Company and liquidation of the Trust Account. The undersigned
acknowledges that the foregoing does not interfere with or limit in any way
the
right of the Company to terminate the undersigned’s positions at any time
(subject to other contractual rights the undersigned may have) nor confer upon
the undersigned any right to continue in his positions with the
Company.
(2)
The
undersigned’s biographical information furnished to the Company and Broadband
and attached hereto as Exhibit B is true and accurate in all respects, does
not
omit any material information with respect to the undersigned’s background and
contains all of the information required to be disclosed pursuant to Item 401
of
Regulation S-K, promulgated under the Securities Act of 1933, as amended. The
undersigned’s Questionnaire previously furnished to the Company and Broadband is
true and accurate in all respects as of the date first written
above.
(3)
The
undersigned represents and warrants that:
(a)
He
is not
subject to or a respondent in any legal action for any injunction relating
to,
or any cease and desist order or order or stipulation to desist or refrain
from
any act or practice relating to the offering to the offering of securities
in
any jurisdiction;
(b)
No
petition under the Federal bankruptcy laws or any state insolvency law has
been
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of the undersigned, or any
partnership in which the undersigned was or is a general partner at or within
two years prior to the date hereof, or any corporation or business association
of which the undersigned was an executive officer at or within two years prior
to the date hereof;
(c)
He
has
never been convicted of or plead guilty to any crime (i) involving any fraud
or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he has not
plead guilty to or been convicted in any criminal proceeding nor is the
undersigned currently a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(d)
The
undersigned has not been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining the undersigned from, or
otherwise limiting, the following activities:
(e)
Acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker
or dealer in securities, or as an affiliated person, director or employee of
any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity; or
(f)
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws;
VII.
The
undersigned has full right and power, without violating any agreement by which
he is bound, to enter into this letter agreement and to serve as Chairman,
a
director of the board of directors and Secretary of the Company.
VIII.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon the agreements, representations and warranties set forth herein in
proceeding with the IPO.
IX.
The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Broadband and the Company and their respective
legal representatives or agents (including any investigative search firm
retained by Broadband or the Company) any information they may have about the
undersigned’s background and finances (the “Information”). Neither Broadband nor
the Company nor their respective agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
X.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that he will vote all Ordinary Shares owned by him prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
XI.
The
undersigned will escrow his Insider Shares for the period commencing on the
Effective Date and ending one year after the consummation of a Business
Combination, subject to the terms of a Share Escrow Agreement which the Company
will enter into with the undersigned and an escrow agent acceptable to the
Company.
XII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against him arising out of or relating in any way to this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right of
either party to serve process in any other manner permitted by law.
XIII.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Immediate Family” shall mean, with respect to any person, such person’s spouse,
children, parents and siblings (including any such relative by adoption or
marriage); (iv) “Insiders” shall mean all officers, directors and shareholders
of the Company immediately prior to the IPO; (v) “Insider Shares” shall mean all
of the Ordinary Shares owned by an Insider prior to the IPO; (vi) “IPO Shares”
shall mean the Ordinary Shares issued in the Company’s IPO; and (vii) “Trust
Account” shall mean the trust account in which most of the proceeds to the
Company of the IPO will be deposited and held for the benefit of the holders
of
the IPO shares, as described in greater detail in the prospectus relating to
the
IPO.
XIV.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
Exhibit
10.2
EXHIBIT
A
[PROVIDE
LIST OF PRIOR FIDUCIARY/CONTRACTUAL OBLIGATIONS]
EXHIBIT
B
Exhibit
10.3
_________,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a shareholder, officer and director of Hambrecht Asia Acquisition
Corp. (the “Company”), in consideration of Broadband Capital Management
LLC(“Broadband”) entering into a letter of intent, dated [ ], 2007 (“Letter of
Intent”), to underwrite an initial public offering (“IPO”) of the securities of
the Company and embarking on, undertaking and continuing to participate in
the
IPO process, hereby agrees as follows (certain capitalized terms used herein
are
defined in paragraph XII hereof):
I.
(1)
In
the
event that the Company fails to consummate a Business Combination within
18, 24
or 36 months, as the case may be, from the effective date (the “Effective Date”)
of the registration statement relating to the IPO, the undersigned shall,
in
accordance with all applicable requirements of the Cayman Islands laws, take
all
action reasonably within his power to dissolve the Company and distribute
all
funds held in the Trust Account to holders of the IPO Shares as soon as
reasonably practicable including, without limitation, (i) causing the Company’s
board of directors to convene and adopt a plan of dissolution and liquidation
and (ii) voting, as a director (if applicable), in favor of adopting such
plan
of dissolution and liquidation.
(2)
Except
with respect to any of the IPO Shares acquired by the undersigned in connection
with or following the IPO, the undersigned hereby (a) waives any and all
right,
title, interest or claim of any kind (a “Claim”) in or to all funds in the Trust
Account and any remaining net assets of the Company upon liquidation of the
Trust Account and dissolution of the Company, (b) waives any Claim the
undersigned may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and (c) agrees that the undersigned
will not seek recourse against the Trust Account for any reason
whatsoever.
(3)
The
undersigned agrees to indemnify and hold harmless the Company against any
and
all loss, liability, claims, damage and expense whatsoever (including, but
not
limited to, any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, whether pending
or
threatened, or any claim whatsoever) to which the Company may become subject
as
a result of any claim by any vendor, prospective or actual target business,
creditor or other entity that is owed money by the Company for services rendered
or products sold to the Company or the claims of any prospective or actual
target businesses, subject to the following limitations: (i) such
indemnification will only be made insofar as the Company did not obtain a
validly enforceable waiver from such party of such party’s rights or claims to
the Trust Account, (ii) such indemnification will be made only to the extent
necessary to ensure that such loss, liability, claim, damage or expense does
not
reduce the amount in the Trust Account below the amount necessary in order
for
each holder of IPO Shares to receive a liquidation amount of at least $7.60
per
IPO Share owned by such holder, and (iii) such indemnity shall be limited
to the
extent of the undersigned’s pro rata beneficial ownership of the Company
immediately prior to the IPO.
II.
In
order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees: (A) not to become an officer or director
of any blank check company which may acquire a business in the People’s Republic of China until the earlier of the announcement of a Business
Combination or the Company’s dissolution and liquidation and (B) to present to
the Company for its consideration, prior to presentation to any other person
or
entity, any suitable opportunity to acquire an operating business until the
earlier of: (i) the consummation by the Company of a Business Combination,
(ii)
the dissolution of the Company or (iii) such time as the undersigned ceases
to
be a director of the Company, subject to any pre-existing fiduciary and
contractual obligations the undersigned might have. Such pre-existing fiduciary
or contractual obligations are described more fully in Exhibit A
hereto.
III.
The
undersigned acknowledges and agrees that the Company will not consummate
any
Business Combination with a company affiliated with any of the Insiders or
their
respective affiliates or a company that is either a portfolio company of,
or has
otherwise received a financial investment from, our founders or their
affiliates. In addition, the undersigned acknowledges and agrees that the
Company will not enter into a Business Combination with any underwriters
or
selling group members or any of their affiliates, unless the Company obtains
an
opinion from an unaffiliated, independent investment banking firm which is
a
member of the National Association of Securities Dealers, Inc. that a Business
Combination with such target business is fair to the Company’s shareholders from
a financial point of view.
IV.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
affiliate of the undersigned (“Affiliate”) will be entitled to receive, and no
such person will accept, any compensation for services rendered to the Company
prior to, or in connection with, the consummation of a Business Combination;
provided, however, that the undersigned shall be entitled to reimbursement
from
the Company for his out-of-pocket expenses incurred in connection with seeking
and consummating a Business Combination.
V.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
Affiliate of the undersigned will be entitled to receive or accept a finder’s
fee or any other compensation in the event the undersigned, any member of
the
Immediate Family of the undersigned or any Affiliate originates a Business
Combination.
VI.
(1)
The
undersigned agrees to be the Chief Financial Officer of the Company and a
director of the Company until the earlier of the consummation of a Business
Combination or the dissolution and liquidation of the Company. The undersigned
agrees to not to resign (or advise the board of directors that the undersigned
declines to seek re-election to the board of directors) from his position
as
officer and director of the Company as set forth in the Registration Statement
without the prior consent of Broadband until the earlier of the consummation
by
the Company of a Business Combination or dissolution of the Company and
liquidation of the Trust Account. The undersigned acknowledges that the
foregoing does not interfere with or limit in any way the right of the Company
to terminate the undersigned’s positions at any time (subject to other
contractual rights the undersigned may have) nor confer upon the undersigned
any
right to continue in his positions with the Company.
(2)
The
undersigned’s biographical information furnished to the Company and Broadband
and attached hereto as Exhibit B is true and accurate in all respects, does
not
omit any material information with respect to the undersigned’s background and
contains all of the information required to be disclosed pursuant to Item
401 of
Regulation S-K, promulgated under the Securities Act of 1933, as amended.
The
undersigned’s Questionnaire previously furnished to the Company and Broadband is
true and accurate in all respects as of the date first written
above.
(3)
The
undersigned represents and warrants that:
(a)
He
is not
subject to or a respondent in any legal action for any injunction relating
to,
or any cease and desist order or order or stipulation to desist or refrain
from
any act or practice relating to the offering to the offering of securities
in
any jurisdiction;
(b)
No
petition under the Federal bankruptcy laws or any state insolvency law has
been
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of the undersigned, or
any
partnership in which the undersigned was or is a general partner at or within
two years prior to the date hereof, or any corporation or business association
of which the undersigned was an executive officer at or within two years
prior
to the date hereof;
(c)
He
has
never been convicted of or plead guilty to any crime (i) involving any fraud
or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he has
not
plead guilty to or been convicted in any criminal proceeding nor is the
undersigned currently a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(d)
The
undersigned has not been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining the undersigned from,
or
otherwise limiting, the following activities:
(e)
Acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any
other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter,
broker
or dealer in securities, or as an affiliated person, director or employee
of any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity; or
(f)
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws;
VII.
The
undersigned has full right and power, without violating any agreement by
which
he is bound, to enter into this letter agreement and to serve as Chief Financial
Officer and a director of the board of directors of the Company.
VIII.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon the agreements, representations and warranties set forth herein
in
proceeding with the IPO.
IX.
The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Broadband and the Company and their respective
legal representatives or agents (including any investigative search firm
retained by Broadband or the Company) any information they may have about
the
undersigned’s background and finances (the “Information”). Neither Broadband nor
the Company nor their respective agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
X.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that he will vote all Ordinary Shares owned by him prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
XI.
The
undersigned will escrow his Insider Shares for the period commencing on the
Effective Date and ending one year after the consummation of a Business
Combination, subject to the terms of a Share Escrow Agreement which the Company
will enter into with the undersigned and an escrow agent acceptable to the
Company.
XII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against him arising out of or relating in any way to
this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient
forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right
of
either party to serve process in any other manner permitted by law.
XIII.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Immediate Family” shall mean, with respect to any person, such person’s spouse,
children, parents and siblings (including any such relative by adoption or
marriage); (iv) “Insiders” shall mean all officers, directors and shareholders
of the Company immediately prior to the IPO; (v) “Insider Shares” shall mean all
of the Ordinary Shares owned by an Insider prior to the IPO; (vi) “IPO Shares”
shall mean the Ordinary Shares issued in the Company’s IPO; and (vii) “Trust
Account” shall mean the trust account in which most of the proceeds to the
Company of the IPO will be deposited and held for the benefit of the holders
of
the IPO shares, as described in greater detail in the prospectus relating
to the
IPO.
XIV.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
EXHIBIT
A
[PROVIDE
LIST OF PRIOR FIDUCIARY/CONTRACTUAL OBLIGATIONS]
EXHIBIT
B
Exhibit
10.4
________,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a shareholder and director of Hambrecht Asia Acquisition Corp.
(the
“Company”), in consideration of Broadband Capital Management LLC
(“Broadband”) entering into a letter of intent, dated [ ], 2007 (“Letter of
Intent”), to underwrite an initial public offering (“IPO”) of the securities of
the Company and embarking on, undertaking and continuing to participate in
the
IPO process, hereby agrees as follows (certain capitalized terms used herein
are
defined in paragraph XII hereof):
I.
(1)
In
the
event that the Company fails to consummate a Business Combination within 18,
24
or 36 months, as the case may be, from the effective date (the “Effective Date”)
of the registration statement relating to the IPO, the undersigned shall, in
accordance with all applicable requirements of the Cayman Islands laws, take
all
action reasonably within his power to dissolve the Company and distribute all
funds held in the Trust Account to holders of the IPO Shares as soon as
reasonably practicable including, without limitation, (i) causing the Company’s
board of directors to convene and adopt a plan of dissolution and liquidation
and (ii) voting, as a director (if applicable), in favor of adopting such plan
of dissolution and liquidation.
(2)
Except
with respect to any of the IPO Shares acquired by the undersigned in connection
with or following the IPO, the undersigned hereby (a) waives any and all right,
title, interest or claim of any kind (a “Claim”) in or to all funds in the Trust
Account and any remaining net assets of the Company upon liquidation of the
Trust Account and dissolution of the Company, (b) waives any Claim the
undersigned may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and (c) agrees that the undersigned
will not seek recourse against the Trust Account for any reason
whatsoever.
II.
In
order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees: (A) not to become an officer or director
of any blank check company which may acquire a business in the People’s Republic of China until the earlier of the announcement of a Business
Combination or the Company’s dissolution and liquidation and (B) to present to
the Company for its consideration, prior to presentation to any other person
or
entity, any suitable opportunity to acquire an operating business until the
earlier of: (i) the consummation by the Company of a Business Combination,
(ii)
the dissolution of the Company or (iii) such time as the undersigned ceases
to
be a director of the Company, subject to any pre-existing fiduciary and
contractual obligations the undersigned might have. Such pre-existing fiduciary
or contractual obligations are described more fully in Exhibit A
hereto.
III.
The
undersigned acknowledges and agrees that the Company will not consummate any
Business Combination with a company affiliated with any of the Insiders or
their
respective affiliates or a company that is either a portfolio company of, or
has
otherwise received a financial investment from, our founders or their
affiliates. In addition, the undersigned acknowledges and agrees that the
Company will not enter into a Business Combination with any underwriters or
selling group members or any of their affiliates, unless the Company obtains
an
opinion from an unaffiliated, independent investment banking firm which is
a
member of the National Association of Securities Dealers, Inc. that a Business
Combination with such target business is fair to the Company’s shareholders from
a financial point of view.
IV.
(1)
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
affiliate of the undersigned (“Affiliate”) will be entitled to receive, and no
such person will accept, any compensation for services rendered to the Company
prior to, or in connection with, the consummation of a Business Combination;
provided, however, that the undersigned shall be entitled to reimbursement
from
the Company for his out-of-pocket expenses incurred in connection with seeking
and consummating a Business Combination.
V.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
Affiliate of the undersigned will be entitled to receive or accept a finder’s
fee or any other compensation in the event the undersigned, any member of the
Immediate Family of the undersigned or any Affiliate originates a Business
Combination.
VI.
(1)
The
undersigned agrees to be a director of the Company until the earlier of the
consummation of a Business Combination or the dissolution and liquidation of
the
Company. The undersigned agrees to not to resign (or advise the board of
directors that the undersigned declines to seek re-election to the board of
directors) from his position as director of the Company as set forth in the
Registration Statement without the prior consent of Broadband until the earlier
of the consummation by the Company of a Business Combination or dissolution
of
the Company and liquidation of the Trust Account. The undersigned acknowledges
that the foregoing does not confer upon the undersigned any right to continue
in
his positions with the Company.
(2)
The
undersigned’s biographical information furnished to the Company and Broadband
and attached hereto as Exhibit B is true and accurate in all respects, does
not
omit any material information with respect to the undersigned’s background and
contains all of the information required to be disclosed pursuant to Item 401
of
Regulation S-K, promulgated under the Securities Act of 1933, as amended. The
undersigned’s Questionnaire previously furnished to the Company and Broadband is
true and accurate in all respects as of the date first written
above.
(3)
The
undersigned represents and warrants that:
(a)
He
is not
subject to or a respondent in any legal action for any injunction relating
to,
or any cease and desist order or order or stipulation to desist or refrain
from
any act or practice relating to the offering to the offering of securities
in
any jurisdiction;
(b)
No
petition under the Federal bankruptcy laws or any state insolvency law has
been
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of the undersigned, or any
partnership in which the undersigned was or is a general partner at or within
two years prior to the date hereof, or any corporation or business association
of which the undersigned was an executive officer at or within two years prior
to the date hereof;
(c)
He
has
never been convicted of or plead guilty to any crime (i) involving any fraud
or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he has not
plead guilty to or been convicted in any criminal proceeding nor is the
undersigned currently a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(d)
The
undersigned has not been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining the undersigned from, or
otherwise limiting, the following activities:
(e)
Acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker
or dealer in securities, or as an affiliated person, director or employee of
any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity; or
(f)
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws;
VII.
The
undersigned has full right and power, without violating any agreement by which
he is bound, to enter into this letter agreement and to serve as a director
of
the board of directors of the Company.
VIII.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon the agreements, representations and warranties set forth herein in
proceeding with the IPO.
IX.
The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Broadband and the Company and their respective
legal representatives or agents (including any investigative search firm
retained by Broadband or the Company) any information they may have about the
undersigned’s background and finances (the “Information”). Neither Broadband nor
the Company nor their respective agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
X.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that he will vote all Ordinary Shares owned by him prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
XI.
The
undersigned will escrow his Insider Shares for the period commencing on the
Effective Date and ending one year after the consummation of a Business
Combination, subject to the terms of a Share Escrow Agreement which the Company
will enter into with the undersigned and an escrow agent acceptable to the
Company.
XII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against him arising out of or relating in any way to this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right of
either party to serve process in any other manner permitted by law.
XIII.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Immediate Family” shall mean, with respect to any person, such person’s spouse,
children, parents and siblings (including any such relative by adoption or
marriage); (iv) “Insiders” shall mean all officers, directors and shareholders
of the Company immediately prior to the IPO; (v) “Insider Shares” shall mean all
of the Ordinary Shares owned by an Insider prior to the IPO; (vi) “IPO Shares”
shall mean the Ordinary Shares issued in the Company’s IPO; and (vii) “Trust
Account” shall mean the trust account in which most of the proceeds to the
Company of the IPO will be deposited and held for the benefit of the holders
of
the IPO shares, as described in greater detail in the prospectus relating to
the
IPO.
XIV.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
EXHIBIT
A
EXHIBIT
B
Exhibit
10.5
_______,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a purchaser of warrants exercisable for Ordinary Shares of
Hambrecht Asia Acquisition Corp. (the “Company”), in consideration of Broadband
Capital Management LLC (“Broadband”) entering into a letter of intent, dated
[ ], 2007
(“Letter of Intent”), to underwrite an initial public offering (“IPO”) of the
securities of the Company and embarking on, undertaking and continuing to
participate in the IPO process, hereby agrees as follows (certain capitalized
terms used herein are defined in paragraph XII hereof):
I.
(
1)
Except
with respect to any of the IPO Shares acquired by the undersigned in connection
with or following the IPO, the undersigned hereby (a) waives any and all
right,
title, interest or claim of any kind (a “Claim”) in or to all funds in the Trust
Account and any remaining net assets of the Company upon liquidation of the
Trust Account and dissolution of the Company, (b) waives any Claim the
undersigned may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and (c) agrees that the undersigned
will not seek recourse against the Trust Account for any reason
whatsoever.
II.
(1) Neither the undersigned, any member of the Immediate Family of the
undersigned, nor any affiliate of the undersigned (“Affiliate”) will be entitled
to receive, and no such person will accept, any compensation for services
rendered to the Company prior to, or in connection with, the consummation
of a
Business Combination; provided, however, that the undersigned shall be entitled
to reimbursement from the Company for his out-of-pocket expenses incurred
in
connection with seeking and consummating a Business Combination.
III.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
Affiliate of the undersigned will be entitled to receive or accept a finder’s
fee or any other compensation in the event the undersigned, any member of
the
Immediate Family of the undersigned or any Affiliate originates a Business
Combination.
(1)
The
undersigned represents and warrants that:
(a)
He
is not
subject to or a respondent in any legal action for any injunction relating
to,
or any cease and desist order or order or stipulation to desist or refrain
from
any act or practice relating to the offering to the offering of securities
in
any jurisdiction;
(b)
No
petition under the Federal bankruptcy laws or any state insolvency law has
been
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of the undersigned, or
any
partnership in which the undersigned was or is a general partner at or within
two years prior to the date hereof, or any corporation or business association
of which the undersigned was an executive officer at or within two years
prior
to the date hereof;
(c)
He
has
never been convicted of or plead guilty to any crime (i) involving any fraud
or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he has
not
plead guilty to or been convicted in any criminal proceeding nor
is
the
undersigned currently a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(d)
The
undersigned has not been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining the undersigned from,
or
otherwise limiting, the following activities:
(e)
Acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any
other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter,
broker
or dealer in securities, or as an affiliated person, director or employee
of any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity; or
(f)
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws;
IV.
The
undersigned has full right and power, without violating any agreement by
which
he is bound, to enter into this letter agreement.
V.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon the agreements, representations and warranties set forth herein
in
proceeding with the IPO.
VI.
The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Broadband and the Company and their respective
legal representatives or agents (including any investigative search firm
retained by Broadband or the Company) any information they may have about
the
undersigned’s background and finances (the “Information”). Neither Broadband nor
the Company nor their respective agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
VII.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that he will vote all Ordinary Shares owned by him prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
VIII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against him arising out of or relating in any way to
this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient
forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right
of
either party to serve process in any other manner permitted by law.
IX.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Immediate Family” shall mean, with respect to any person, such person’s spouse,
children, parents and siblings (including any such relative by
adoption
or
marriage); (iv) “Insiders” shall mean all officers, directors and shareholders
of the Company immediately prior to the IPO; (v) “Insider Shares” shall mean all
of the Ordinary Shares owned by an Insider prior to the IPO; (vi) “IPO Shares”
shall mean the Ordinary Shares issued in the Company’s IPO; and (vii) “Trust
Account” shall mean the trust account in which most of the proceeds to the
Company of the IPO will be deposited and held for the benefit of the holders
of
the IPO shares, as described in greater detail in the prospectus relating
to the
IPO.
X.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
|
|
|
|
AEX
ENTERPRISES LIMITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
Exhibit
10.6
_______,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a consultant to Hambrecht Asia Acquisition Corp. (the “Company”),
in consideration of Broadband Capital Management LLC (“Broadband”) entering
into a letter of intent, dated
[
], 2007 (“Letter of Intent”), to underwrite an initial public offering (“IPO”)
of the securities of the Company and embarking on, undertaking and continuing
to
participate in the IPO process, hereby agrees as follows (certain capitalized
terms used herein are defined in paragraph XII hereof):
I.
Except
with respect to any of the IPO Shares acquired by the undersigned in connection
with or following the IPO, the undersigned hereby (a) waives any and all
right,
title, interest or claim of any kind (a “Claim”) in or to all funds in the Trust
Account and any remaining net assets of the Company upon liquidation of the
Trust Account and dissolution of the Company, (b) waives any Claim the
undersigned may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and (c) agrees that the undersigned
will not seek recourse against the Trust Account for any reason
whatsoever.
II. (1) The
undersigned agrees to be a consultant to the Company until the earlier of
the
consummation of a Business Combination or the dissolution and liquidation
of the
Company. The undersigned agrees to not to resign (or advise the board of
directors that the undersigned declines to seek re-election to the board
of
directors) from his position as a consultant to the Company as set forth
in the
Registration Statement without the prior consent of Broadband until the earlier
of the consummation by the Company of a Business Combination or dissolution
of
the Company and liquidation of the Trust Account. The undersigned acknowledges
that the foregoing does not interfere with or limit in any way the right
of the
Company to terminate the undersigned’s positions at any time (subject to other
contractual rights the undersigned may have) nor confer upon the undersigned
any
right to continue in his positions with the Company.
(2)
The
undersigned’s biographical information furnished to the Company and Broadband
and attached hereto as Exhibit A is true and accurate in all respects, does
not
omit any material information with respect to the undersigned’s background and
contains all of the information required to be disclosed pursuant to Item
401 of
Regulation S-K, promulgated under the Securities Act of 1933, as amended.
The
undersigned’s Questionnaire previously furnished to the Company and Broadband is
true and accurate in all respects as of the date first written
above.
(3) The
undersigned represents and warrants that:
(a)
He
is not
subject to or a respondent in any legal action for any injunction relating
to,
or any cease and desist order or order or stipulation to desist or refrain
from
any act or practice relating to the offering to the offering of securities
in
any jurisdiction;
(b)
No
petition under the Federal bankruptcy laws or any state insolvency law has
been
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of the undersigned, or
any
partnership in which the undersigned was or is a general partner at
or
within
two years prior to the date hereof, or any corporation or business association
of which the undersigned was an executive officer at or within two years
prior
to the date hereof;
(c)
He
has
never been convicted of or plead guilty to any crime (i) involving any fraud
or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he has
not
plead guilty to or been convicted in any criminal proceeding nor is the
undersigned currently a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(d)
The
undersigned has not been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining the undersigned from,
or
otherwise limiting, the following activities:
(e)
Acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any
other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter,
broker
or dealer in securities, or as an affiliated person, director or employee
of any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity; or
(f)
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws;
III.
The
undersigned has full right and power, without violating any agreement by
which
he is bound, to enter into this letter agreement.
IV.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon the agreements, representations and warranties set forth herein
in
proceeding with the IPO.
V.
The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Broadband and the Company and their respective
legal representatives or agents (including any investigative search firm
retained by Broadband or the Company) any information they may have about
the
undersigned’s background and finances (the “Information”). Neither Broadband nor
the Company nor their respective agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
VI.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that he will vote all Ordinary Shares owned by him prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
VII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against him arising out of or relating in any way to
this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient
forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right
of
either party to serve process in any other manner permitted by law.
VIII.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Immediate Family” shall mean, with respect to any person, such person’s spouse,
children, parents and siblings (including any such relative by adoption or
marriage); (iv) “Insiders” shall mean all officers, directors and shareholders
of the Company immediately prior to the IPO; (v) “Insider Shares” shall mean all
of the Ordinary Shares owned by an Insider prior to the IPO; (vi) “IPO Shares”
shall mean the Ordinary Shares issued in the Company’s IPO; and (vii) “Trust
Account” shall mean the trust account in which most of the proceeds to the
Company of the IPO will be deposited and held for the benefit of the holders
of
the IPO shares, as described in greater detail in the prospectus relating
to the
IPO.
IX.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
Exhibit
10.7
________,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a purchaser of warrants exercisable for Ordinary Shares of
Hambrecht Asia Acquisition Corp. (the “Company”), in consideration of Broadband
Capital Management LLC (“Broadband”) entering into a letter of intent, dated
[
], 2007 (“Letter of Intent”), to underwrite an initial public offering (“IPO”)
of the securities of the Company and embarking on, undertaking and continuing
to
participate in the IPO process, hereby agrees as follows (certain capitalized
terms used herein are defined in paragraph XII hereof):
I.
(1) Except with respect to any of the IPO Shares acquired by the
undersigned in connection with or following the IPO, the undersigned hereby
(a)
waives any and all right, title, interest or claim of any kind (a “Claim”) in or
to all funds in the Trust Account and any remaining net assets of the Company
upon liquidation of the Trust Account and dissolution of the Company, (b)
waives
any Claim the undersigned may have in the future as a result of, or arising
out
of, any contracts or agreements with the Company and (c) agrees that the
undersigned will not seek recourse against the Trust Account for any reason
whatsoever.
II.
(
1
)
Neither
the undersigned nor any affiliate of the undersigned (“Affiliate”) will be
entitled to receive, and no such person will accept, any compensation for
services rendered to the Company prior to, or in connection with, the
consummation of a Business Combination; provided, however, that the undersigned
shall be entitled to reimbursement from the Company for his out-of-pocket
expenses incurred in connection with seeking and consummating a Business
Combination.
III.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
Affiliate of the undersigned will be entitled to receive or accept a finder's
fee or any other compensation in the event the undersigned, any member of
the
Immediate Family of the undersigned or any Affiliate originates a Business
Combination.
IV.
The
undersigned has full right and power, without violating any agreement by
which
it is bound, to enter into this letter agreement.
V.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon this agreements and the representations and warranties set forth
herein in proceeding with the IPO.
VI.
[Intentionally
Omitted]
VII.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that it will vote all Ordinary Shares owned by it prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
VIII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against it arising out of or relating in any way to this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient
forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on its
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right
of
either party to serve process in any other manner permitted by law.
IX.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Insiders” shall mean all officers, directors and shareholders of the Company
immediately prior to the IPO; (iv) “Insider Shares” shall mean all of the
Ordinary Shares owned by an Insider prior to the IPO; (v) “IPO Shares” shall
mean the Ordinary Shares issued in the Company’s IPO; and (vi) “Trust Account”
shall mean the trust account in which most of the proceeds to the
Company
of the IPO will be deposited and held for the benefit of the holders of the
IPO
shares, as described in greater detail in the prospectus relating to the
IPO.
X.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
|
|
|
|
WR Hambrecht + Co., LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
Exhibit
10.8
_________,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a purchaser of warrants exercisable for Ordinary Shares of
Hambrecht Asia Acquisition Corp. (the “Company”), in consideration of Broadband
Capital Management LLC (“Broadband”) entering into a letter of intent,
dated [ ],
2007 (“Letter of Intent”), to underwrite an initial public offering (“IPO”) of
the securities of the Company and embarking on, undertaking and continuing
to
participate in the IPO process, hereby agrees as follows (certain capitalized
terms used herein are defined in paragraph XII hereof):
I.
(1) Except with respect to any of the IPO Shares acquired by the
undersigned in connection with or following the IPO, the undersigned hereby
(a)
waives any and all right, title, interest or claim of any kind (a “Claim”) in or
to all funds in the Trust Account and any remaining net assets of the Company
upon liquidation of the Trust Account and dissolution of the Company, (b) waives
any Claim the undersigned may have in the future as a result of, or arising
out
of, any contracts or agreements with the Company and (c) agrees that the
undersigned will not seek recourse against the Trust Account for any reason
whatsoever.
II.
(1) Neither the undersigned nor any affiliate of the undersigned
(“Affiliate”) will be entitled to receive, and no such person will accept, any
compensation for services rendered to the Company prior to, or in connection
with, the consummation of a Business Combination; provided, however, that the
undersigned shall be entitled to reimbursement from the Company for his
out-of-pocket expenses incurred in connection with seeking and consummating
a
Business Combination.
III.
Neither
the undersigned nor any Affiliate of the undersigned will be entitled to receive
or accept a finder’s fee or any other compensation in the event the undersigned
or any Affiliate originates a Business Combination.
(1)
The
undersigned represents and warrants that:
(a)
He
is not
subject to or a respondent in any legal action for any injunction relating
to,
or any cease and desist order or order or stipulation to desist or refrain
from
any act or practice relating to the offering to the offering of securities
in
any jurisdiction;
(b)
No
petition under the Federal bankruptcy laws or any state insolvency law has
been
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of the undersigned, or any
partnership in which the undersigned was or is a general partner at or within
two years prior to the date hereof, or any corporation or business association
of which the undersigned was an executive officer at or within two years prior
to the date hereof;
(c)
He
has
never been convicted of or plead guilty to any crime (i) involving any fraud
or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he has not
plead guilty to or been convicted in any criminal proceeding nor is the
undersigned currently a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(d)
The
undersigned has not been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining the undersigned from, or
otherwise limiting, the following activities:
(e)
Acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker
or dealer in securities, or as an affiliated person, director or employee of
any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity; or
(f)
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws;
IV.
The
undersigned has full right and power, without violating any agreement by which
it is bound, to enter into this letter agreement.
V.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon the agreements, representations and warranties set forth herein in
proceeding with the IPO.
VI.
The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Broadband and the Company and their respective
legal representatives or agents (including any investigative search firm
retained by Broadband or the Company) any information they may have about the
undersigned’s background and finances (the “Information”). Neither Broadband nor
the Company nor their respective agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
VII.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that it will vote all Ordinary Shares owned by it prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
VIII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against it arising out of or relating in any way to this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on its
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right of
either party to serve process in any other manner permitted by law.
IX.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Insiders” shall mean all officers, directors and shareholders of the Company
immediately prior to the IPO; (iv) “Insider Shares” shall mean all of the
Ordinary Shares owned by an Insider prior to the IPO; (v) “IPO Shares” shall
mean the Ordinary Shares issued in the Company’s IPO; and (vi) “Trust Account”
shall mean the trust account in which most of the proceeds to the
Company
of the IPO will be deposited and held for the benefit of the holders of the
IPO
shares, as described in greater detail in the prospectus relating to the
IPO.
X.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
|
|
|
|
Hambrecht
1980
Revocable Trust
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
Exhibit
10.9
INVESTMENT
MANAGEMENT TRUST AGREEMENT
This
Agreement is made as of
___________________, 2008 by and between Hambrecht Asia Acquisition Corporation
(the “Company”) and Continental Stock Transfer & Trust Company
(“Trustee”).
WHEREAS,
the Company’s Registration Statement on Form S-1, File No.
333-146147______________ (“Registration Statement”), for its initial public
offering (“IPO”) of units (the “Units”) of the Company, each Unit consisting of
one ordinary share, par value $0.001 per share (the “Ordinary Share”) and one
warrant to purchase one Ordinary Share (the “Warrant”), has been declared
effective as of the date hereof (the “Effective Date”) by the Securities and
Exchange Commission (the “Commission”); and
WHEREAS,
the Company has sold an aggregate of 750,000 warrants (the “Insider Warrants”)
in a private placement (the “Placement”) pursuant to Regulation D promulgated by
the Commission pursuant to the Securities Act of 1933, as amended (the “Act”)
for a purchase price of $750,000; and
WHEREAS,
Broadband Capital Management LLC (the “Representative”) is acting as the
representative of the several underwriters in the IPO; and
WHEREAS,
as described in the Company’s Registration Statement, and in accordance with the
Company’s Amended and Restated Articles of Association, $29,760,000 of the gross
proceeds of the IPO ($34,224,000 if the underwriters’ over-allotment option is
exercised in full) and $750,000 of the sale proceeds of the Insider Warrants
will be delivered to the Trustee to be deposited and held in a trust account
for
the benefit of the Company and the holders of the Company’s Ordinary Shares
issued in the IPO (except as otherwise provided herein) and in the event the
Units are registered in Colorado, pursuant to Section 11-51-302(6) of the
Colorado Revised Statutes (the amount to be delivered to the Trustee will be
referred to herein as the “Property”; the stockholders for whose benefit the
Trustee shall hold the Property will be referred to as the “Public
Stockholders,” and the Public Stockholders, the Representative and the Company
will be referred to together as the “Beneficiaries”); and
WHEREAS,
pursuant to the Underwriting Agreement, dated as of
[ ], 2008, between the
Company and the Representative, a portion of the Property equal to $640,000
($736,000 if the underwriters’ over-allotment option is exercised in full) is
attributable to deferred underwriting compensation that will become payable
by
the Company to the Representative upon the consummation of a Business
Combination (as defined in the Registration Statement) (the “Deferred
Discount”); and
WHEREAS,
the Company and the Trustee desire to enter into this Agreement to set forth
the
terms and conditions pursuant to which the Trustee shall hold the
Property;
IT
IS
AGREED:
1.
Agreements
and Covenants of Trustee. The Trustee hereby agrees and covenants
to:
(a)
Hold
the
Property in trust for the Beneficiaries in accordance with the terms of this
Agreement, including the terms of Section 11-51-302(6) of the Colorado Statute
in a segregated trust account (“Trust Account”) established by the Trustee at a
branch of [__________________] selected by the Trustee;
(b)
Manage,
supervise and administer the Trust Account subject to the terms and conditions
set forth herein;
(c)
In
a
timely manner, upon the written instruction of the Company, to invest and
reinvest the Property in any “Government Security.” As used herein, Government
Security means any Treasury Bill issued by the United States, having a maturity
of one hundred and eighty days or less;
(d)
Collect
and receive, when due, all principal and income arising from the Property,
which
shall become part of the “Property,” as such term is used herein;
(e)
Notify
the Company and the Representative of all communications received by it with
respect to any Property requiring action by the Company;
(f)
Supply
any necessary information or documents as may be requested by the Company in
connection with the Company’s preparation of the tax returns for the Trust
Account or the Company;
(g)
Participate
in any plan or proceeding for protecting or enforcing any right or interest
arising from the Property if, as and when instructed by the Company and/or
the
Representative to do so;
(h)
Render
to
the Company and to the Representative, and to such other person as the Company
may instruct, monthly written statements of the activities of and amounts in
the
Trust Account reflecting all receipts and disbursements of the Trust
Account;
(i)
If
there
is any income or other tax obligation relating to the income from the Property
in the Trust Account, then, from time to time, at the written instruction of
the
Company, the Trustee shall promptly, to the extent there is not sufficient
cash
in the Trust Account to pay such tax obligation, liquidate such assets held
in
the Trust Account as shall be designated by the Company in writing;
(j)
As
of the
date of the consummation of a business combination (“Business Combination”) or
the vote of the Company’s Board of Directors to liquidate and dissolve the
Company, commence liquidation of the Trust Account upon receipt of the Officers’
Certificate in accordance with the terms of a letter (“Termination Letter”), in
a form substantially similar to that attached hereto as
Exhibit
A
or
Exhibit
B
,
signed
on behalf of the Company by its Chairman or Chief Executive Officer and Chief
Financial Officer, and complete the liquidation of the Trust Account and
distribute the Property in the Trust Account only as directed in the Termination
Letter and the other documents referred to therein. The Trustee understands
and
agrees that disbursements from the Trust Account shall be made only pursuant
to
a duly executed Termination Letter, together with the other documents referenced
herein. In all cases, the Trustee shall provide the Representative with a copy
of any Termination Letter and/or any other correspondence it delivers or
receives with respect to any proposed withdrawal from the tTrust Account
promptly after it has delivered or received same. The provisions of this Section
1(j) may not be modified, amended or deleted under any
circumstances;
(k)
In
accordance with the instructions contained in the Termination Letter, as of
the
date 18 months from the date of this Agreement (the “LOI Termination Date”), or
24 months from the date hereof in the event the Company has executed the Letter
of Intent (defined below) prior to the LOI Termination Date but failed to
consummate a Business Combination (“Second Termination Date”), or 36 months from
the date hereof in the event the Company’s shareholders have voted to increase
the amount of time available to the Company to consummate a Business Combination
(“Third Termination Date”), commence liquidation of the Trust Account. The
Trustee, upon consultation with the Company and the Representative, shall
deliver a notice to Public Stockholders of record as of the LOI Termination
Date, Second Termination Date or Third Termination Date, whichever the case
may
be, by U.S. mail or via the Depository Trust Company (“DTC”), within five days
of the LOI Termination Date, Second Termination Date or Third Termination Date,
as applicable, to notify the Public Stockholders of such event and take such
other actions as it may deem necessary to inform the Beneficiaries. The Trustee
shall deliver to each Public Stockholder its ratable share of the Property
against satisfactory evidence of delivery of the stock certificates by the
Public Stockholders to the Company through DTC, its Deposit Withdraw Agent
Commission (DWAC) system or as otherwise presented to the Trustee;
provided
,
however
,
that
in the
event that a Termination Letter has not been received by the LOI Termination
Date,
the
Second Termination Date or the Third Termination Date, whichever the case may
be,
the
Trust Account shall be liquidated as part of the Company’s plan of dissolution
and distribution approved by the Company’s Public Stockholders in accordance
with the procedures set forth in the Termination Letter to the stockholders
of
record on the record date;
provided
,
further
,
that
the record date shall be within ten (10) days of the LOI Termination
Date,
the
Second Termination Date or Third Termination Date, whichever the case may
be,
or as
soon thereafter as is practicable.
Notwithstanding
the foregoing, (i) if the Trustee receives a bona fide, executed letter of
intent or engagement letter (the “Letter of Intent”) for a Business Combination
prior to the LOI Termination Date, accompanied by an Officers’ Certificate as
described in paragraph 3(e) hereof, then the Trustee shall forego or suspend
any
liquidation of the Trust Account until the earlier of a Business Combination
or
the Second Termination Date, and (ii) if, prior to the Second Termination Date,
the Trustee receives a certified copy of the results of a meeting of the
Company’s stockholders pursuant to which the Company’s stockholders extended the
time available to the Company to consummate a Business Combination to the Third
Termination Date, accompanied by an Officers’ Certificate as described in
paragraph 3(e) hereof, then the Trustee shall forego or suspend any liquidation
of the Trust Account until the earlier of a Business Combination or the Third
Termination Date; and
(l)
The
distribution, if any, of the Deferred Discount to the underwriters upon the
liquidation of the Trust Account as provided herein shall be made from the
Trust
Account through the Trustee (and not through the Company) in accordance with
a
written instruction of the Company and the Representative.
2.
Limited
Distributions of Income on Property.
(a)
If
there
is any income, franchise or other tax obligation owed by the Company, as
determined by the Company, then, from time to time, at the written instruction
of the Company, the Trustee shall promptly to the extent there is not sufficient
cash in the Trust Account to pay such tax obligation, liquidate such assets
held
in the Trust Account as shall be designated by the Company in writing,
and
disburse
to the Company by wire transfer, out of the Property in the Trust Account,
the
amount
indicated
by the Company as owing
in
respect of such income tax obligation
.
(b)
Upon
receipt by the Trustee from time to time of an executed Officer’s Certificate
containing certification that such distribution pursuant to this Section 2(b)
shall only be used to fund the working capital requirements of the Company
and
the costs related to identifying, researching and acquiring a prospective target
business, distribute one-half of the interest earned on the Trust Account (as
calculated by the Company), net of taxes payable, up to a maximum of $1,350,000,
the Trustee shall make a distribution of the amount specified in such
Certificate to the Company to fund working capital and general corporate
requirements as promptly as practicable after receipt of such Officer’s
Certificate .
(c)
Except
as
provided in this Section 2, no other distributions from the Trust Account shall
be permitted except in accordance with Sections 1(i) and (j)
hereof.
3.
Agreements
and Covenants of the Company. The Company hereby agrees and
covenants:
(a)
To
give
all instructions to the Trustee hereunder in writing, signed by the Company’s
Chief Executive Officer or Chairman of the Board. In addition, except with
respect to its duties under paragraph 1(i) and (j) above, the Trustee shall
be
entitled to rely on, and shall be protected in relying on, any verbal or
telephonic advice or instruction which it in good faith believes to be given
by
any one of the persons authorized above to give written instructions; provided,
however, that the Company shall promptly confirm such instructions in
writing;
(b)
Subject
to the provisions of Section 5 hereof, to hold the Trustee harmless and
indemnify the Trustee from and against, any and all expenses, including
reasonable counsels’ fees and disbursements, or loss suffered by the Trustee in
connection with any action, suit or other proceeding brought against the Trustee
involving any claim, or in connection with any claim or demand which in any
way
arises out of or relates to this Agreement, the services of the Trustee
hereunder, or the Property or any income earned from investment of the Property,
except for expenses and losses resulting from the Trustee’s gross negligence or
willful misconduct. Promptly after the receipt by the Trustee of notice of
demand or claim or the commencement of any action, suit or proceeding, pursuant
to which the Trustee intends to seek indemnification under this paragraph,
it
shall notify the Company in writing of such claim (hereinafter referred to
as
the “Indemnified Claim”). The Company shall have the right to conduct and manage
the defense against such Indemnified Claim, provided, that the Company shall
obtain the consent of the Trustee with respect to the selection of counsel,
which consent shall not be unreasonably withheld. The Trustee may participate
in
such action with its own counsel;
(c)
To
pay
the Trustee an initial acceptance fee, an annual fee
and
a
transaction processing fee for each disbursement made pursuant to Sections
2(a)
and 2(b) as set forth on Schedule A hereto, which fees shall be subject to
modification by the parties from time to time.
It is
expressly understood that the Property shall not be used to pay such fee. The
Company shall pay the Trustee the initial acceptance fee and first year’s fee at
the consummation of the IPO and thereafter on the anniversary of the Effective
Date. The Trustee shall refund to the Company the fee (on a pro rata basis)
with
respect to any period after the liquidation of the Trust Fund. The Company
shall
not be responsible for any other fees or charges of the Trustee except as may
be
provided in Section 2(b) hereof (it being expressly understood that the
Property shall not be used to make any payments to the Trustee under such
section);
(d)
That,
in
the event that the Company consummates a Business Combination and the Trust
Account is liquidated in accordance with Section 1(i) or (j) hereof, the Trustee
or another independent party designated by the Representative shall act as
the
inspector of election to certify the results of the shareholder vote and the
Public Stockholder vote;
(e)
That
the
Company’s Chairman or Chief Executive Officer and Chief Financial Officer shall
certify (i) prior to the LOI Termination Date that (A) the Company has entered
into a Business Combination; (B) the Company has entered into a Letter of Intent
or definitive agreement relating to a Business Combination; or (C) that the
Company’s Board of Directors has determined to liquidate the Company; (ii) prior
to the Second Termination Date that (A) the Company has entered into a Business
Combination; (B) the Company’s stockholders voted to extend the time period
available to the Company to consummate a Business Combination to the Third
Termination Date; or (C) that the Company’s Board of Directors has determined to
liquidate the Company; and (iii) prior to the Third Termination Date that (A)
the Company has entered into a Business Combination; or (B) that the Company’s
Board of Directors has determined to liquidate the Company. A copy of any
applicable consents, actions of stockholders, Letter of Intent or definitive
agreement shall be attached as an exhibit to the Officer’s
Certificate;
(f)
In
connection with any vote of the Company’s stockholders regarding a Business
Combination, to provide to the Trustee an affidavit or certificate (the
“Report”) of a firm regularly engaged in the business of soliciting proxies and
tabulating stockholder votes (which firm may be the Trustee) verifying the
vote
of the Company’s shareholders and Public Stockholders regarding such Business
Combination. Such Report shall be attached as an exhibit to the Termination
Letter, as applicable;
(g)
Within
five (5) business days after the Underwriters’ over-allotment option (or any
unexercised portion thereof) expires or its exercise in full, to provide the
Trustee notice in writing (with a copy to the Underwriters) of the total amount
of the Deferred Discount, which shall in no event be less than $640,000;
and
(h)
As
soon
as practicable after the LOI Termination Date, Second Termination Date or Third
Termination Date, as applicable, to instruct the Trustee to commence liquidation
of the Trust Account as part of the Company’s plan of dissolution and
liquidation.
4.
Limitations
of Liability. The Trustee shall have no responsibility or liability
to:
(a)
Take
any
action with respect to the Property, other than as directed in Section 1 and
2
hereof and the Trustee shall have no liability to any party except for liability
arising out of its own gross negligence or willful misconduct;
(b)
Institute
any proceeding for the collection of any principal and income arising from,
or
institute, appear in or defend any proceeding of any kind with respect to,
any
of the Property unless and until it shall have received written instructions
from the Company given as provided herein to do so and the Company shall have
advanced or guaranteed to it funds sufficient to pay any expenses incident
thereto;
(c)
Change
the investment of any Property, other than in compliance with Section
1(c);
(d)
Refund
any depreciation in principal of any Property;
(e)
Assume
that the authority of any person designated by the Company to give instructions
hereunder shall not be continuing unless provided otherwise in such designation,
or unless the Company shall have delivered a written revocation of such
authority to the Trustee;
(f)
The
Company or to anyone else for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, in good faith and in the exercise of
its
own best judgment, except for its gross negligence or willful misconduct. The
Trustee may rely conclusively and shall be protected in acting upon any order,
notice, demand, certificate, opinion or advice of counsel (including counsel
chosen by the Trustee), statement, instrument, report or other paper or document
(not only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any information
therein contained) which is believed by the Trustee, in good faith, to be
genuine and to be signed or presented by the proper person or persons. The
Trustee shall not be bound by any notice or demand, or any waiver, modification,
termination or rescission of this Agreement or any of the terms hereof, unless
evidenced by a written instrument delivered to the Trustee signed by the proper
party or parties and, if the duties or rights of the Trustee are affected,
unless it shall give its prior written consent thereto;
(g)
Prepare,
execute and file tax reports, income or other tax returns and pay any taxes
with
respect to income and activities relating to the Trust Account, regardless
of
whether such tax is payable by the Trust Account or the Company (including
but
not limited to income tax obligations), it being expressly understood that
as
set forth in Section 2(a), if there is any income or other tax obligation
relating to the Trust Account or the Property in the Trust Account, as
determined from time to time by the Company and regardless of whether such
tax
is payable by the Company or the Trust, at the written instruction of the
Company, the Trustee shall make funds available in cash from the Property in
the
Trust Account an amount specified by the Company as owing to the applicable
taxing authority, which amount shall be paid directly to the Company by
electronic funds transfer, account debit or other method of payment, and the
Company shall forward such payment to the taxing authority; and
(h)
Verify
calculations, qualify or otherwise approve Company requests for distributions
pursuant to Section 2(b).
5.
No
Right
of Set-Off. The Trustee waives any right of set-off or any right, title,
interest or claim of any kind that the Trustee may have against the Property
held in the Trust Account. In the event the Trustee has a claim against the
Company under this Agreement, including, without limitation, under Section
3(b),
the Trustee will pursue such claim solely against the Company and not against
the Property held in the Trust Account.
6.
Termination.
This Agreement shall terminate as follows:
(a)
If
the
Trustee gives written notice to the Company that it desires to resign under
this
Agreement, the Company shall use its reasonable efforts to locate a successor
trustee during which time the Trustee shall continue to act in accordance with
the terms of this Agreement. At such time that the Company notifies the Trustee
that a successor trustee has been appointed by the Company and has agreed to
become subject to the terms of this Agreement, the Trustee shall transfer the
management of the Trust Account to the successor trustee, including but not
limited to the transfer of copies of the reports and statements relating to
the
Trust Account, whereupon this Agreement shall terminate; provided, however,
that, in the event that the Company does not locate a successor trustee within
ninety days of receipt of the resignation notice from the Trustee, the Trustee
may submit an application to have the Property deposited with the United States
District Court for the Southern District of New York and upon such deposit,
the
Trustee shall be immune from any liability whatsoever that arises due to any
actions or omissions to act by any party after such deposit; or
(b)
At
such
time that the Trustee has completed the liquidation of the Trust Account in
accordance with the provisions of Section 1(i) or 1(j) hereof, and distributed
the Property in accordance with the provisions of the Termination Letter, this
Agreement shall terminate.
7.
Miscellaneous.
(a)
The
Company and the Trustee each acknowledge that the Trustee will follow the
security procedures set forth below with respect to funds transferred from
the
Trust Account. Upon receipt of written instructions, the Trustee will confirm
such instructions with an Authorized Individual listed on the attached
Exhibit
C
(as such
list may be updated from time to time by pursuant to an Officer’s Certificate
signed by the Chairman or Chief Executive Officer and Chief Financial Officer).
The Company and the Trustee will each restrict access to confidential
information relating to such security procedures to authorized persons. Each
party must notify the other party immediately if it has reason to believe
unauthorized persons may have obtained access to such information, or of any
change in its authorized personnel. In executing funds transfers, the Trustee
will rely upon account numbers or other identifying numbers of a beneficiary,
beneficiary’s bank or intermediary bank, rather than names. The Trustee shall
not be liable for any loss, liability or expense resulting from any error in
an
account number or other identifying number, provided it has accurately
transmitted the numbers provided.
(b)
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to conflict of laws. It
may
be executed in several counterparts, each one of which shall constitute an
original, and together shall constitute but one instrument.
(c)
This
Agreement contains the entire agreement and understanding of the parties hereto
with respect to the subject matter hereof. This Agreement or any provision
hereof may only be changed, amended or modified by a writing signed by each
of
the parties hereto; provided, however, that no such change, amendment or
modification may be made without the prior written consent of the Representative
who, along with each other Underwriter, the parties specifically
agree, is and shall be a third party beneficiary for purposes of this
Agreement; and provided further, any amendment to Section 1(j) shall require
the
vote or consent of holders of 95% of the Public Stockholders, it being the
specific intention of the parties hereto that each Public Stockholder is and
shall be a third-party beneficiary of this Section 6(c) with the same right
and
power to enforce this Section 6(c) as either of the parties hereto. For purposes
of this Section 6(c), the “consent of 95% of the Public Stockholders” shall mean
receipt by the Trustee of a certificate from an entity certifying that (i)
such
entity regularly engages in the business of serving as inspector of elections
for companies whose securities are publicly traded, and (ii) either (a) 95%
of
the Public Stockholders of record as of the record date, have voted in favor
of
such amendment or modification or (b) 95% of the Public Stockholders of record
as of the record date has delivered to such entity a signed writing approving
such amendment or modification.. As to any claim, cross-claim or counterclaim
in
any way relating to this Agreement, each party waives the right to trial by
jury.
(d)
The
parties hereto consent to the jurisdiction and venue of any state or federal
court located in the City of New York for purposes of resolving any disputes
hereunder. The parties hereto irrevocably submit to such jurisdiction, which
jurisdiction shall be exclusive, and hereby waive any objection to such
exclusive jurisdiction and accept such venue, and waive any objection that
such
courts represent an inconvenient forum.
(e)
Any
notice, consent or request to be given in connection with any of the terms
or
provisions of this Agreement shall be in writing and shall be sent by express
mail or similar private courier service, by certified mail (return receipt
requested), by hand delivery or by facsimile transmission:
if
to the
Trustee, to:
Continental
Stock Transfer & Trust Company
17
Battery Park
New
York,
New York 10004
Attn:
[
]
Fax
No.:
[ ]
if
to the
Company, to:
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Attn:
John Wang
Fax
No.:
[ ]
in
either
case with a copy to:
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Attn:
T.
Corby Hocker
Fax
No.:
(212) 702-9830
Ellenoff
Grossman & Schole LLP
370
Lexington Avenue, 19
th
Floor
New
York,
New York 10017
Attn:
Douglas S. Ellenoff
Fax
No:
(212) 370-7889
and
Loeb
& Loeb LLP
345
Park
Avenue
New
York,
New York 10154
Attn:
Mitchell S. Nussbaum
Fax
No:
(212) 407-4990
(f)
This
Agreement may not be assigned by the Trustee without the prior written consent
of the Company and the Representative.
(g)
Each
of
the Trustee and the Company hereby represents that it has the full right and
power and has been duly authorized to enter into this Agreement and to perform
its respective obligations as contemplated hereunder. The Trustee acknowledges
and agrees that it shall not make any claims or proceed against the Trust
Account, including by way of set-off, and shall not be entitled to any funds
in
the Trust Account under any circumstance. The Trustee hereby consents to the
inclusion of Continental Stock Transfer & Trust Company in the Registration
Statement and other materials relating to the IPO.
[Signature
page to follow]
IN
WITNESS WHEREOF, the parties have duly executed this Investment Management
Trust
Agreement as of the date first written above.
|
|
|
|
|
|
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY
,
as Trustee
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
HAMBRECHT
ASIA ACQUISITION
CORPORATION
|
|
|
|
|
|
|
|
|
|
Name:
John
Wang
|
|
|
Title:
Chief Executive Officer, President and
Director
|
SCHEDULE
A
EXHIBIT
A
[LETTERHEAD
OF COMPANY]
[INSERT
DATE]
Continental
Stock Transfer & Trust Company
17
Battery Place
New
York,
New York 10004
Attn:[
]
Re:
Trust
Account No. [____________
]
Termination Letter
Gentlemen:
Pursuant
to the Investment Management Trust Agreement between Hambrecht Asia Acquisition
Corp. (“Company”) and Continental Stock Transfer & Trust Company
(“Trustee”), dated as of _____________, 2008 (“Trust Agreement”), this is to
advise you that the Company has entered into an agreement (“Business Agreement”)
with _____________ (“Target Business”) to consummate a business combination with
Target Business (“Business Combination”) on or about [INSERT DATE]. The Company
shall notify you at least 24 hours in advance of the actual date of the
consummation of the Business Combination (“Consummation Date”).
In
accordance with the terms of the Trust Agreement, we hereby authorize you to
commence liquidation of the Trust Account to the effect that, on the
Consummation Date, all of the funds held in the Trust Account will be
immediately available for transfer to the account or accounts that the Company
shall direct on the Consummation Date.
On
the
Consummation Date (i) counsel for the Company shall deliver to you written
notification that (a) the Business Combination has been consummated and (b)
the
provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado Statute
have
been met and (ii) the Company shall deliver to you written instructions with
respect to the transfer of the funds held in the Trust Account (“Instruction
Letter”). You are hereby directed and authorized to transfer the funds held in
the Trust Account, including, pursuant to the terms of the Underwriting
Agreement, dated as of [__], 2008, between the Company and the Representative,
the portion of the Property attributable to the Deferred Discount (as defined
in
the Trust Agreement), immediately upon your receipt of the counsel’s letter and
the Instruction Letter, in accordance with the terms of the Instruction Letter.
In the event that certain deposits held in the Trust Account may not be
liquidated by the Consummation Date without penalty, you will notify the Company
of the same and the Company shall direct you as to whether such funds should
remain in the Trust Account and be distributed after the Consummation Date
to
the Company or be distributed immediately and the penalty incurred. Upon the
distribution of all the funds in the Trust Account pursuant to the terms hereof,
the Trust Agreement shall be terminated.
In
the
event that the Business Combination is not consummated on the Consummation
Date
described in the notice thereof and we have not notified you on or before the
original Consummation Date of a new Consummation Date, then the funds held
in
the Trust Account shall be reinvested as provided in the Trust Agreement on
the
business day immediately following the Consummation Date as set forth in the
notice.
|
|
|
|
|
|
Very
truly yours,
|
|
|
|
|
|
HAMBRECHT
ASIA ACQUISITION CORP.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
EXHIBIT
B
[LETTERHEAD
OF COMPANY]
[INSERT
DATE]
Continental
Stock Transfer & Trust Company
17
Battery Place
New
York,
New York 10004
Attn:[
]
Re:
Trust
Account No. [____________] Termination Letter
Gentlemen:
Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between Hambrecht
Asia Acquisition Corp. (“Company”) and Continental Stock Transfer & Trust
Company (“Trustee”), dated as of _______________, 2008 (“Trust Agreement”), this
is to advise you that the Board of Directors of the Company has voted to
dissolve and liquidate the Company. Attached hereto is a copy of the minutes
of
the meeting of the Board of Directors of the Company relating thereto, certified
by the Secretary of the Company as true and correct and in full force and
effect.
In
accordance with the terms of the Trust Agreement, we hereby (a) certify to
you
that the provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado
Statute have been met and (b) authorize you, to commence liquidation of the
Trust Account. You will notify the Company and [ ] (“Designated Paying Agent”)
in writing as to when all of the funds in the Trust Account will be available
for immediate transfer (“Transfer Date”). The Designated Paying Agent shall
thereafter notify you as to the account or accounts of the Designated Paying
Agent that the funds in the Trust Account should be transferred to on the
Transfer Date so that the Designated Paying Agent may commence distribution
of
such funds in accordance with the Company’s instructions. You shall have no
obligation to oversee the Designated Paying Agent’s distribution of the funds.
Upon the payment to the Designated Paying Agent of all the funds in the Trust
Account, the Trust Agreement shall be terminated.
|
|
|
|
|
|
Very
truly yours,
|
|
|
|
|
|
HAMBRECHT
ASIA ACQUISITION CORP.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
EXHIBIT
C
AUTHORIZED
INDIVIDUAL(S)
AUTHORIZED
FOR TELEPHONE CALL BACK
|
|
|
|
COMPANY:
|
Hambrecht
Asia Acquisition Corp.
|
|
|
|
|
|
John
Wang
|
|
|
Telephone:
[ ]
|
|
|
|
|
|
Robert
Eu
|
|
|
Telephone:
[ ]
|
|
|
|
|
|
Stephen
Cannon
|
|
|
Telephone:
[ ]
|
|
|
|
|
TRUSTEE:
|
Continental
Stock Transfer & Trust Company
|
|
|
|
|
|
Attn:
[ ]
|
|
|
Telephone:
[ ]
|
|
|
|
|
REPRESENTATIVE:
|
Broadband
Capital Management LLC
|
|
|
|
|
|
T.
Corby Hocker
|
|
|
Telephone:
(212) 277-5309
|
Exhibit
10.10
SECURITIES
ESCROW AGREEMENT
SECURITIES
ESCROW AGREEMENT, dated as of ___________
,
2008
(“Agreement”), by and among HAMBRECHT ASIA ACQUISITION CORP., a company
organized under the laws of the Cayman Islands (“Company”), JOHN WANG, ROBERT J.
EU, STEPHEN N. CANNON and AEX ENTERPRISES LIMITED (collectively “Initial
Shareholders”) and CONTINENTAL STOCK TRANSFER & TRUST COMPANY (“Escrow
Agent”).
WHEREAS,
the Company has entered into an Und
erwriting
Agreement, dated
___________
,
2008
(“Underwriting Agreement”), with Broadband Capital Management, Inc.
(“Broadband”) acting as representative of the several underwriters
(collectively, the “Underwriters”), pursuant to which, among other matters, the
Underwriters have agreed to purchase 4,000,000 units (not including the
underwriters’ overallotment option) (“Units”) of the Company. Each Unit consists
of one of the Company’s ordinary share, $0.001 par value (each an “Ordinary
Share”), and one warrant (“Warrant”), each Warrant to purchase one Ordinary
Share, all as more fully described in the Company’s definitive Prospectus, dated
_________
,
2008
(“Prospectus”) comprising part of the Company’s Registration Statement on Form
S-1 (File No. 333-146147 ) under the Securities Act of 1933, as amended
(together, the “Registration Statement”), which was declared effective on
___________
,
2008
(“Effective Date”).
WHEREAS,
the Initial Shareholders have agreed as a condition of the underwriters’
obligation to purchase the Units pursuant to the Underwriting Agreement and
to
offer them to the public, to deposit all of their Ordinary Shares (the “Escrow
Shares”) and warrants exercisable for Ordinary Shares (the “Escrow Warrants”;
and collectively with the Escrow Shares, the “Escrow Securities”), as set forth
opposite their respective names in
Exhibit
A
attached
hereto, in escrow as hereinafter provided.
WHEREAS,
the Company and the Initial Shareholders desire that the Escrow Agent accept
the
Escrow Securities, in escrow, to be held and disbursed as hereinafter provided.
IT
IS
AGREED:
1.
Appointment
of Escrow Agent. The Company and the Initial Shareholders hereby appoint the
Escrow Agent to act in accordance with and subject to the terms of this
Agreement and the Escrow Agent hereby accepts such appointment and agrees to
act
in accordance with and subject to such terms.
2.
Deposit
of Escrow Securities. On or before the Effective Date, each of the Initial
Shareholders shall deliver to the Escrow Agent certificates representing his
or
her respective Escrow Securities, to be held and disbursed subject to the terms
and conditions of this Agreement. Each Initial Shareholder acknowledges and
agrees that the certificate(s) representing his or her Escrow Securities will
bear a legend to reflect the deposit of such Escrow Securities under this
Agreement.
3.
Disbursement
of the Escrow Securities. The Escrow Agent shall (i) hold the Escrow Securities
until the date that is twelve (12) months following consummation of a Business
Combination, as defined in the Registration Statement and (ii) hold the Escrow
Warrants until the consummation of a Business Combination. The time that the
Escrow Warrants or the Escrow Shares are held in escrow pursuant to this
Agreement is referred to herein as the “Escrow Period”. On the expiration of the
applicable Escrow Period, the Escrow Agent shall, upon written instructions
from
each Initial Shareholder, disburse each of the Initial Shareholder’s Escrow
Securities to such Initial Shareholder; provided, however, that if the Escrow
Agent is notified by the Company pursuant to Section 6.7 hereof that the Company
is being liquidated at any time during the Escrow Period, then the Escrow Agent
shall promptly destroy the certificates representing the Escrow Securities
and,
provided further, that
if,
after
the Company consummates a Business Combination , it (or the surviving entity)
subsequently
consummates a liquidation, merger, stock exchange or other similar transaction
which results in all of its shareholders having the right to exchange their
Ordinary Shares or warrants for cash, securities or other property, then the
Escrow Agent will, upon receipt of a notice, executed by the Chairman, Chief
Executive Officer or Chief Financial Officer of the Company, in form reasonably
acceptable to the Escrow Agent, certifying that such transaction is then being
consummated, release the Escrow Securities to the Initial Shareholders so that
they can similarly participate. The Escrow Agent shall have no further duties
hereunder after the disbursement or destruction of the Escrow Securities in
accordance with this Section 3.
4.
Rights
of
Initial Shareholders in Escrow Securities.
4.1
Voting
Rights as a Shareholder
.
Subject
to the terms of the Insider Letter described in Section 4.4 hereof and except
as
herein provided, the Initial Shareholders shall retain all of their rights
as
shareholders of the Company during the Escrow Period with respect to the Escrow
Shares, including, without limitation, the right to vote such shares.
4.2
Dividends
and Other Distributions in Respect of the Escrow Securities.
During
the Escrow Period, all dividends payable in cash with respect to the Escrow
Securities shall be paid to the Initial Shareholders, but all dividends payable
in securities or other non-cash property (“Non-Cash Dividends”) shall be
delivered to the Escrow Agent to hold in accordance with the terms hereof.
As
used herein, the term “Escrow Securities” shall be deemed to include the
Non-Cash Dividends distributed thereon, if any.
4.3
Restrictions
on Transfer
.
Except
as set forth in Section 3, during the Escrow Period, no sale, transfer or other
disposition may be made of any or all of the Escrow Securities except (i) by
gift to an affiliate or a member of Initial Shareholder’s immediate family or to
a trust or other entity, the beneficiary of which is an Initial Shareholder
or a
member of an Initial Shareholder’s immediate family, (ii) by virtue of the laws
of descent and distribution upon death of any Initial Shareholder, or (iii)
pursuant to a qualified domestic relations order; provided, however, that such
permissive transfers may be implemented only upon the respective transferee’s
written agreement to be bound by the terms and conditions of this Agreement
and
of the Insider Letter (as defined below) signed by the Initial Shareholder
transferring the Escrow Securities. During the Escrow Period, the Initial
Shareholders shall not pledge or grant a security interest in the Escrow
Securities or grant a security interest in their rights under this Agreement.
4.4
Insider
Letters
.
Each of
the Initial Shareholders has executed a letter agreement with Broadband and
the
Company, dated as of the Effective Date, and which is filed as an exhibit to
the
Registration Statement (“Insider Letter”), respecting the rights and obligations
of such Initial Shareholder in certain events, including but not limited to
the
liquidation of the Company.
5.
Concerning
the Escrow Agent.
5.1
Good
Faith Reliance
.
The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and in the exercise of its own best judgment, and may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Escrow Agent),
statement, instrument, report or other paper or document (not only as to its
due
execution and the validity and effectiveness of its provisions, but also as
to
the truth and acceptability of any information therein contained) which is
believed by the Escrow Agent to be genuine and to be signed or presented by
the
proper person or persons. The Escrow Agent shall not be bound by any notice
or
demand, or any waiver, modification, termination or rescission of this Agreement
unless evidenced by a writing delivered to the Escrow Agent signed by the proper
party or parties and, if the duties or rights of the Escrow Agent are affected,
unless it shall have given its prior written consent thereto.
5.2
Indemnification
.
The
Escrow Agent shall be indemnified and held harmless by the Company from and
against any expenses, including counsel fees and disbursements, or loss suffered
by the Escrow Agent in connection with any action, suit or other proceeding
involving any claim which in any way, directly or indirectly, arises out of
or
relates to this Agreement, the services of the Escrow Agent hereunder, or the
Escrow Securities held by it hereunder, other than expenses or losses arising
from the gross negligence or willful misconduct of the Escrow Agent. Promptly
after the receipt by the Escrow Agent of notice of any demand or claim or the
commencement of any action, suit or proceeding, the Escrow Agent shall notify
the other parties hereto in writing. In the event of the receipt of such notice,
the Escrow Agent, in its sole discretion, may commence an action in the nature
of interpleader in an appropriate court to determine ownership or disposition
of
the Escrow Securities or it may deposit the Escrow Securities with the clerk
of
any appropriate court or it may retain the Escrow Securities pending receipt
of
a final, non-appealable order of a court having jurisdiction over all of the
parties hereto directing to whom and under what circumstances the Escrow
Securities are to be disbursed and delivered. The provisions of this Section
5.2
shall survive in the event the Escrow Agent resigns or is discharged pursuant
to
Sections 5.5 or 5.6 below.
5.3
Compensation
.
The
Escrow Agent shall be entitled to reasonable compensation from the Company
for
all services rendered by it hereunder, as set forth on Exhibit B hereto.
The
Escrow Agent shall also be entitled to reimbursement from the Company for all
expenses paid or incurred by it in the administration of its duties hereunder
including, but not limited to, all counsel, advisors’ and agents’ fees and
disbursements and all taxes or other governmental charges.
5.4
Further
Assurances
.
From
time to time on and after the date hereof, the Company and the Initial
Shareholders shall deliver or cause to be delivered to the Escrow Agent such
further documents and instruments and shall do or cause to be done such further
acts as the Escrow Agent shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.
5.5
Resignation
.
The
Escrow Agent may resign at any time and be discharged from its duties as escrow
agent hereunder by its giving the other parties hereto written notice and such
resignation shall become effective as hereinafter provided. Such resignation
shall become effective at such time that the Escrow Agent shall turn over to
a
successor escrow agent appointed by the Company and approved by Broadband,
the
Escrow Securities held hereunder. If no new escrow agent is so appointed within
the 60 day period following the giving of such notice of resignation, the Escrow
Agent may deposit the Escrow Securities with any court it reasonably deems
appropriate.
5.6
Discharge
of Escrow Agent
.
The
Escrow Agent shall resign and be discharged from its duties as escrow agent
hereunder if so requested in writing at any time by the other parties hereto,
jointly, provided, however, that such resignation shall become effective only
upon acceptance of appointment by a successor escrow agent as provided in
Section 5.5.
5.7
Liability
.
Notwithstanding anything herein to the contrary, the Escrow Agent shall not
be
relieved from liability hereunder for its own gross
negligence or its own willful misconduct.
6.
Miscellaneous.
6.1
Governing
Law.
This
Agreement shall for all purposes be deemed to be made under and shall be
construed in accordance with the laws of the State of New York. Each of the
parties hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of New York or the United States District Court for
the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. Each of the parties hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum.
6.2
Third
Party Beneficiaries.
Each of
the Initial Shareholders hereby acknowledges that the Underwriters, including,
without limitation, Broadband, are third party beneficiaries of this Agreement
and this Agreement may not be modified or changed without the prior written
consent of Broadband.
6.3
Entire
Agreement
.
This
Agreement contains the entire agreement of the parties hereto with respect
to
the subject matter hereof and, except as expressly provided herein, may not
be
changed or modified except by an instrument in writing signed by the party
to
the charged.
6.4
Headings
.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation thereof.
6.5
Binding
Effect
.
This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their legal
representatives, successors and assigns.
6.6
Notices
.
Any
notice or other communication required or which may be given hereunder shall
be
in writing and either be delivered personally or by private national courier
service, or be mailed, certified or registered mail, return receipt requested,
postage prepaid, and shall be deemed given when so delivered personally or,
if
sent by private national courier service, on the next business day after
delivery to the courier, or, if mailed, two days after the date of mailing,
as
follows:
If
to the
Company, to:
Hambrecht
Asia Acquisition Corporation
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Attn:
John Wang, Chief Executive Officer
Fax
No.:
[
]
If
to a
Shareholder, to his or her address set forth in Exhibit A.
and
if to
the Escrow Agent, to:
Continental Stock Transfer & Trust Company
17
Battery Place
New
York, NY 10004
Attn:
[
]
Fax
No.:
[
]
A
copy of
any notice sent hereunder shall be sent to:
Ellenoff
Grossman & Schole, LLP
370
Lexington Avenue
New
York,
New York 10017
Attn:
Douglas S. Ellenoff, Esq.
and
Broadband
Capital Management, Inc.
712
Fifth
Avenue
New
York,
New York 10019
Attn:
T.
Corby Hocker
and
Loeb
& Loeb LLP
345
Park
Avenue
New
York,
New York 10154
Attn:
Mitchell S. Nussbaum, Esq.
The
parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in
the
manner provided herein for giving notice.
6.7
Liquidation
of Company
.
The
Company shall give the Escrow Agent written notification of the liquidation
and
dissolution of the Company in the event that the Company fails to consummate
a
Business Combination within the time period(s) specified in the Prospectus.
6.8
Counterparts
.
This
Agreement may be executed in several counterparts each one of which shall
constitute an original and may be delivered by facsimile transmission and
together shall constitute one instrument.
6.9
Waiver
.
Notwithstanding anything herein to the contrary, the Escrow Agent hereby waives
any and all right, title, interest or claim of any kind (“Claim”) in or to any
distribution of the Trust Account, and hereby agrees not to seek recourse,
reimbursement, payment or satisfaction for any Claim against the Trust Account
for any reason whatsoever.
[remainder
of document continued on next page]
WITNESS
the execution of this Agreement as of the date first above written.
|
|
|
|
|
|
HAMBRECHT
ASIA ACQUISITION CORP.
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
INITIAL
SHAREHOLDERS:
|
|
|
|
|
John
Wang
|
|
|
|
|
|
|
|
|
Robert
J. Eu
|
|
|
|
|
|
|
CANNON
FAMILY IRREVOCABLE TRUST
|
|
|
|
|
|
By:
|
|
|
|
Stephen
N. Cannon, Trustee
|
|
|
|
|
|
|
AEX
ENTERPRISES LIMITED
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
W.R.
HAMBRECHT + CO., LLC
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
HAMBRECHT
1980 REVOCABLE TRUST
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
MARBELLA
CAPITAL PARTNERS LTD.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
Continental
Stock Transfer & Trust Company
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
EXHIBIT
A
|
Name
and Address of Initial Shareholders
|
|
Number
of Escrow Shares
|
|
Number
of Escrow Warrants
|
|
|
John
Wang
[address]
|
|
|
333,333
|
|
|
0
|
|
|
Robert
J. Eu
[address]
|
|
|
333,334
|
|
|
0
|
|
|
Cannon
Family Irrevocable Trust
[address]
|
|
|
333,333
|
|
|
0
|
|
|
AEX
Enterprises Limited
[address]
|
|
|
0
|
|
|
300,000
|
|
|
WR
Hambrecht + Co., LLC
|
|
|
0
|
|
|
150,000
|
|
Hambrecht
1980 Revocable Trust
[address]
|
|
|
0
|
|
|
300,000
|
|
Shea
Ventures LLC
[address]
|
|
|
0
|
|
|
300,000
|
|
Marbella
Capital Partners Ltd.
[address]
|
|
|
0
|
|
|
100,000
|
|
EXHIBIT B
Escrow
Agent Fees
$1,800
annually for acting agent escrow fee.
Initial
acceptance fee and first year agent fee to be paid at closing.
Exhibit
10.12
REGISTRATION
RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the ____
day of ___________, 2008, by and among, Hambrecht Asia Acquisition Corp., a
company organized under the laws of the Cayman Islands (the “Company”), and the
undersigned parties listed under Investors on the signature page hereto (each,
an “Investor” and collectively, the “Investors”).
WHEREAS,
the Investors currently hold all of the issued and outstanding securities of
the
Company; and
WHEREAS,
the Investors and the Company desire to enter into this Agreement to provide
the
Investors with certain rights relating to the registration of Ordinary Shares
owned by them and the Ordinary Shares they may acquire upon exercise of the
Insider Securities;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1.
DEFINITIONS.
The following capitalized terms used herein have the following
meanings:
“Agreement”
means this Agreement, as amended, restated, supplemented, or otherwise modified
from time to time.
“Commission”
means the Securities and Exchange Commission, or any other federal agency then
administering the Securities Act or the Exchange Act.
“Company”
is defined in the preamble to this Agreement.
“Demand
Registration” is defined in Section 2.1.1.
“Demanding
Holder” is defined in Section 2.1.1.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall
be
in effect at the time.
“Form
S-3” is defined in Section 2.3.
“Indemnified
Party” is defined in Section 4.3.
“Indemnifying
Party” is defined in Section 4.3.
“Insider
Securities” means the warrants being purchased by certain of the Investors prior
to or simultaneously with the consummation of the Company’s initial public
offering, which such warrants are convertible into Ordinary Shares.
“Investor”
is defined in the preamble to this Agreement.
“Investor
Indemnified Party” is defined in Section 4.1.
“Maximum
Number of Shares” is defined in Section 2.1.4.
“Notices”
is defined in Section 6.3.
“Ordinary
Shares” shall mean ordinary shares of the Company, par value $0.001 per
share.
“Piggy-Back
Registration” is defined in Section 2.2.1.
“Purchase
Option” means the option to purchase 280,000 units, each unit consisting of one
Ordinary Share and one Ordinary Share purchase warrant, issued to Broadband
Capital Management, Inc. or its registered assignees in connection with the
Company’s initial public offering of securities (as may be transferred from time
to time in accordance with its terms).
“Register,”
“registered” and “registration” mean a registration with respect to the
Registrable Securities effected by preparing and filing a registration statement
or similar document in compliance with the requirements of the Securities Act,
and the applicable rules and regulations promulgated thereunder, and such
registration statement becoming effective.
“Registrable
Securities” means (i) all of the Ordinary Shares owned or held by Investors
prior to the consummation of the Company’s initial public offering and (ii) all
of the Insider Securities (and underlying Ordinary Shares) owned or held by
Investors upon consummation of the Company’s initial public offering.
Registrable Securities includes any warrants, Ordinary Shares or other
securities of the Company issued as a dividend or other distribution with
respect to or in exchange for or in replacement of such Ordinary Shares. As
to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when: (a) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act
and
such securities shall have been sold, transferred, disposed of or exchanged
in
accordance with such Registration Statement; (b) such securities shall have
been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration under
the
Securities Act; (c) such securities shall have ceased to be outstanding, or
(d)
the Registrable Securities are salable under Rule 144(k) in the opinion of
counsel to the Company.
“Registration
Statement” means a registration statement filed by the Company with the
Commission in compliance with the Securities Act and the rules and regulations
promulgated thereunder for a public offering and sale of securities of the
Company (other than a registration statement on Form S-4 or Form S-8, or their
successors, or any registration statement covering only securities proposed
to
be issued in exchange for securities or assets of another entity).
“Release
Date” means the earliest date on which any of the Ordinary Shares or Insider
Securities are disbursed from escrow pursuant to Section 3 of that certain
Securities Escrow Agreement dated as of __________, 2008 by and among the
parties hereto and Continental Stock Transfer & Trust Company, as escrow
agent (“Securities Escrow Agreement”).
“Repurchase
Right” is defined in Section 6.10.1.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect
at
the time.
“Underwriter”
means a securities dealer who purchases any Registrable Securities as principal
in an underwritten offering and not as part of such dealer’s market-making
activities.
2.
REGISTRATION
RIGHTS.
2.1
Demand
Registration
.
2.1.1
Request
for Registration
.
At any
time and from time to time on or after the Release Date, the holders of not
less
than a majority of any class of the Registrable Securities held by the Investors
or the transferees of the Investors, may make a written demand for registration
under the Securities Act of all or part of their Registrable Securities (a
“Demand Registration”). Any demand for a Demand Registration shall specify the
number of shares of Registrable Securities proposed to be sold and the intended
method(s) of distribution thereof. The Company will notify all holders of
Registrable Securities of the demand within ten (10) days from the receipt
of
the Demand Registration, and each holder of Registrable Securities who wishes
to
include all or a portion of such holder’s Registrable Securities in the Demand
Registration (each such holder including shares of Registrable Securities in
such registration, a “Demanding Holder”) shall so notify the Company within
fifteen (15) days after the receipt by the holder of the notice from the
Company. Upon any such request, the Demanding Holders shall be entitled to
have
their Registrable Securities included in the Demand Registration, subject to
Section 2.1.4 and the provisos set forth in Section 3.1.1. The Company shall
not
be obligated to effect more than an aggregate of two (2) Demand Registrations
under this Section 2.1.1 in respect of Registrable Securities.
2.1.2
Effective
Registration
.
A
registration will not count as a Demand Registration until the Registration
Statement filed with the Commission with respect to such Demand Registration
has
been declared effective and the Company has complied with all of its obligations
under this Agreement with respect thereto; provided, however, that if, after
such Registration Statement has been declared effective, the offering of
Registrable Securities pursuant to a Demand Registration is interfered with
by
any stop order or injunction of the Commission or any other governmental agency
or court, the Registration Statement with respect to such Demand Registration
will be deemed not to have been declared effective, unless and until, (i) such
stop order or injunction is removed, rescinded or otherwise terminated, and
(ii)
a majority-in-interest of the Demanding Holders thereafter elect to continue
the
offering; provided, further, that the Company shall not be obligated to file
a
second Registration Statement until a Registration Statement that has been
filed
is counted as a Demand Registration or is terminated or withdrawn.
2.1.3
Underwritten
Offering
.
If not
less than a majority in interest of the Demanding Holders so elect and such
holders so advise the Company as part of their written demand for a Demand
Registration, the offering of such Registrable Securities pursuant to such
Demand Registration shall be in the form of an underwritten offering. In such
event, the right of any holder to include its Registrable Securities in such
registration shall be conditioned upon such holder’s participation in such
underwriting and the inclusion of such holder’s Registrable Securities in the
underwriting to the extent provided herein. All Demanding Holders proposing
to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the Underwriter or Underwriters
selected for such underwriting by a majority-in-interest of the holders
initiating the Demand Registration.
2.1.4
Reduction
of Offering
.
Subject
to the registration rights set forth in the Purchase Option, which rights,
shall
in no way be limited by the Maximum Number of Shares to be included in the
Registration Statement pursuant to this Section 2.1.4, if the managing
Underwriter or Underwriters for a Demand Registration that is to be an
underwritten offering advises the Company and the Demanding Holders in writing
that the dollar amount or number of shares of Registrable Securities which
the
Demanding Holders desire to sell, taken together with all other Ordinary Shares
or other securities which the Company desires to sell and the Ordinary Shares,
if any, as to which registration has been requested pursuant to written
contractual piggy-back registration rights held by other shareholders of the
Company who desire to sell, exceeds the maximum dollar amount or maximum number
of shares that can be sold in such offering without adversely affecting the
proposed offering price, the timing, the distribution method, or the probability
of success of such offering (such maximum dollar amount or maximum number of
shares, as applicable, the “Maximum Number of Shares”), then the Company shall
include in such registration: (i) first, the Registrable Securities as to which
Demand Registration has been requested by the Demanding Holders (pro rata in
accordance with the number of shares of Registrable Securities which such
Demanding Holder has requested be included in such registration, regardless
of
the number of shares of Registrable Securities held by each Demanding Holder)
that can be sold without exceeding the Maximum Number of Shares; (ii) second,
to
the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the Ordinary Shares or other securities that the Company
desires to sell that can be sold without exceeding the Maximum Number of Shares;
(iii) third, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clauses (i) and (ii), the Ordinary Shares for the
account of other persons that the Company is obligated to register pursuant
to
written contractual arrangements with such persons and that can be sold without
exceeding the Maximum Number of Shares; and (v) fourth, to the extent that
the
Maximum Number of Shares have not been reached under the foregoing clauses
(i),
(ii), and (iii), the Ordinary Shares that other shareholders desire to sell
that
can be sold without exceeding the Maximum Number of Shares.
2.1.5
Withdrawal
.
If a
majority-in-interest of the Demanding Holders disapprove of the terms of any
underwriting or are not entitled to include all of their Registrable Securities
in any offering, such majority-in-interest of the Demanding Holders may elect
to
withdraw from such offering by giving written notice to the Company and the
Underwriter or Underwriters of their request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with
respect to such Demand Registration. If the majority-in-interest of the
Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then such registration shall not count as a Demand Registration
provided for in this Section 2.1.
2.2
Piggy-Back
Registration
.
2.2.1
Piggy-Back
Rights
.
If at
any time on or after the Release Date the Company proposes to file a
Registration Statement under the Securities Act with respect to an offering
of
equity securities, or securities or other obligations exercisable or
exchangeable for, or convertible into, equity securities, by the Company for
its
own account or for shareholders of the Company for their account (or by the
Company and by shareholders of the Company including, without limitation,
pursuant to Section 2.1), other than a Registration Statement (i) filed in
connection with any employee stock option or other benefit plan,
(ii) for
an exchange offer or offering of securities solely to the Company’s existing
shareholders, (iii) for an offering of debt that is convertible into equity
securities of the Company or (iv) for a dividend reinvestment plan, then the
Company shall (x) give written notice of such proposed filing to the holders
of
Registrable
Securities as soon as practicable but in no event less than ten (10) days before
the anticipated filing date, which notice shall describe the amount
and type
of securities to be included in such offering, the intended method(s) of
distribution, and the name of the proposed managing Underwriter or Underwriters,
if any, of the offering, and (y) offer to the holders of Registrable Securities
in such notice the opportunity to register the sale of such number of shares
of
Registrable Securities as such holders may request in writing within five (5)
days following receipt of such notice (a “Piggy-Back Registration”). The Company
shall cause such Registrable Securities to be included in such registration
and
shall use its best efforts to cause the managing Underwriter or Underwriters
of
a proposed underwritten offering to permit the Registrable Securities requested
to be included in a Piggy-Back Registration to be included on the same terms
and
conditions as any similar securities of the Company and to permit the sale
or
other disposition of such Registrable Securities in accordance with the intended
method(s) of distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back Registration
that
involves an Underwriter or Underwriters shall enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected for
such Piggy-Back Registration.
2.2.2
Reduction
of Offering
.
Subject
to the registration rights set forth in the Purchase Option, which rights,
shall
in no way be limited by the Maximum Number of Shares to be included in the
Registration Statement pursuant to this Section 2.2.2, if the managing
Underwriter or Underwriters for a Piggy-Back Registration that is to be an
underwritten offering advises the Company and the holders of Registrable
Securities in writing that the dollar amount or number of Ordinary Shares which
the Company desires to sell, taken together with Ordinary Shares, if any, as
to
which registration has been demanded pursuant to written contractual
arrangements with persons other than the holders of Registrable Securities
hereunder, the Registrable Securities as to which registration has been
requested under this Section 2.2, and the Ordinary Shares, if any, as to which
registration has been requested pursuant to the written contractual piggy-back
registration rights of other shareholders of the Company, exceeds the Maximum
Number of Shares, then the Company shall include in any such
registration:
(i)
If
the
registration is undertaken for the Company’s account: (A) first, the Ordinary
Shares or other securities that the Company desires to
sell
that can be sold without exceeding the Maximum Number of Shares; (B) second,
to
the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (A), the Ordinary Shares, if any, including the Registrable
Securities and the securities underlying the Purchase Option, as to which
registration has been requested pursuant to written contractual piggy-back
registration rights of security holders (pro rata in accordance with the number
of Ordinary Shares which each such person has actually requested to be included
in such registration, regardless of the number of Ordinary Shares with respect
to which such persons have
the
right
to request such inclusion) that can be sold without exceeding the Maximum Number
of Shares; and
(ii)
If
the
registration is a “demand” registration
undertaken at the demand of persons other than the holders of Registrable
Securities pursuant to written
contractual
arrangements with such persons, (A) first, the Ordinary Shares for the account
of the demanding persons that can be sold without exceeding the Maximum Number
of Shares; (B) second, to the extent that the Maximum Number of Shares has
not
been reached under the foregoing clause (A), the Ordinary Shares or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; and (C) third, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clauses (A) and (B),
the Registrable Securities as to which registration has been requested under
this Section 2.2 (pro rata in accordance with the number of shares of
Registrable Securities or securities underlying the Purchase Option held by
each
such holder); and (D) fourth, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clauses (A), (B) and (C), the Ordinary
Shares, if any, as to which registration has been requested pursuant to written
contractual piggy-back registration rights which other shareholders desire
to
sell that can be sold without exceeding the Maximum Number of
Shares.
2.2.3
Withdrawal
.
Any
holder of Registrable Securities may elect to withdraw such holder’s request for
inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement. The Company may also elect to
withdraw a registration statement at any time prior to the effectiveness of
the
Registration Statement. Notwithstanding any such withdrawal, the Company shall
pay all expenses incurred by the holders of Registrable Securities in connection
with such Piggy-Back Registration as provided in Section 3.3.
2.3
Registrations
on Form S-3
.
The
holders of Registrable Securities may at any time and from time to time, request
in writing that the Company register the resale of any or all of such
Registrable Securities on Form S-3 or any similar short-form registration which
may be available at such time (“Form S-3”); provided, however, that the Company
shall not be obligated to effect such request through an underwritten offering.
Upon receipt of such written request, the Company will promptly give written
notice of the proposed registration to all other holders of Registrable
Securities, and, as soon as practicable thereafter, effect the registration
of
all or such portion of such holder’s or holders’ Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any other holder or holders joining in such request as are
specified in a written request given within fifteen (15) days after receipt
of
such written notice from the Company; provided, however, that the Company shall
not be obligated to effect any such registration pursuant to this Section 2.3:
(i) if Form S-3 is not available for such offering; or (ii) if the holders
of
the Registrable Securities, together with the holders of any other securities
of
the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at any aggregate
price
to the public of less than $500,000. Registrations effected pursuant to this
Section 2.3 shall not be counted as Demand Registrations effected pursuant
to
Section 2.1.
2.4
No
Net
Cash Settlement Value
.
In
connection with the exercise of the Insider Securities, the Company will not
be
obligated to deliver securities, and there are no contractual penalties for
failure to deliver securities, if a registration statement is not effective
at
the time of exercise; however, the Company may satisfy its obligation by
delivering unregistered Ordinary Shares. In no event will the Company be
required to net cash settle an exercise of a
n
Insider
Security.
3.
REGISTRATION
PROCEDURES.
3.1
Filings;
Information
.
Whenever the Company is required to effect the registration of any Registrable
Securities pursuant to Section 2, the Company shall use its best efforts to
effect the registration and sale of such Registrable Securities in accordance
with the intended method(s) of distribution thereof as expeditiously as
practicable, and in connection with any such request:
3.1.1
Filing
Registration Statement
.
The
Company shall, as expeditiously as possible and in any event within sixty (60)
days after receipt of a request for a Demand Registration pursuant to Section
2.1, prepare and file with the Commission a Registration Statement on any form
for which the Company then qualifies or which counsel for the Company shall
deem
appropriate and which form shall be available for the sale of all Registrable
Securities to be registered thereunder in accordance with the intended method(s)
of distribution thereof, and shall use its best efforts to cause such
Registration Statement to become and remain effective for the period required
by
Section 3.1.3; provided, however, that the Company shall have the right to
defer
any Demand Registration for up to thirty (30) days, and any Piggy-Back
Registration for such period as may be applicable to deferment of any demand
registration to which such Piggy-Back Registration relates, in each case if
the
Company shall furnish to the holders a certificate signed by the Chief Executive
Officer of the Company stating that, in the good faith judgment of the Board
of
Directors of the Company, it would be materially detrimental to the Company
and
its shareholders for such Registration Statement to be effected at such time;
provided further, however, that the Company shall not have the right to exercise
the right set forth in the immediately preceding proviso more than once in
any
365-day period in respect of a Demand Registration hereunder.
3.1.2
Copies
.
The
Company shall, prior to filing a Registration Statement or prospectus, or any
amendment or supplement thereto, furnish without charge to the holders of
Registrable Securities included in such registration, and such holders’ legal
counsel, copies of such Registration Statement as proposed to be filed, each
amendment and supplement to such Registration Statement (in each case including
all exhibits thereto and documents incorporated by reference therein), the
prospectus included in such Registration Statement (including each preliminary
prospectus), and such other documents as the holders of Registrable Securities
included in such registration or legal counsel for any such holders may request
in order to facilitate the disposition of the Registrable Securities owned
by
such holders.
3.1.3
Amendments
and Supplements
.
The
Company shall prepare and file with the Commission such amendments, including
post-effective amendments, and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and in compliance with the provisions of the
Securities Act until all Registrable Securities and other securities covered
by
such Registration Statement have been disposed of in accordance with the
intended method(s) of distribution set forth in such Registration Statement
(which period shall not exceed the sum of one hundred eighty (180) days plus
any
period during which any such disposition is interfered with by any stop order
or
injunction of the Commission or any governmental agency or court) or such
securities have been withdrawn.
3.1.4
Notification
.
After
the filing of a Registration Statement, the Company shall promptly, and in
no
event more than two (2) business days after such filing, notify the holders
of
Registrable Securities included in such Registration Statement of such filing,
and shall further notify such holders promptly and confirm such advice in
writing in all events within two (2) business days of the occurrence of any
of
the following: (i) when such Registration Statement becomes effective; (ii)
when
any post-effective amendment to such Registration Statement becomes effective;
(iii) the issuance or threatened issuance by the Commission of any stop order
(and the Company shall take all actions required to prevent the entry of such
stop order or to remove it if entered); and (iv) any request by the Commission
for any amendment or supplement to such Registration Statement or any prospectus
relating thereto or for additional information or of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of the securities covered by
such Registration Statement, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary to make the statements therein not misleading,
and
promptly make available to the holders of Registrable Securities included in
such Registration Statement any such supplement or amendment; except that before
filing with the Commission a Registration Statement or prospectus or any
amendment or supplement thereto, including documents incorporated by reference,
the Company shall furnish to the holders of Registrable Securities included
in
such Registration Statement and to the legal counsel for any such holders,
copies of all such documents proposed to be filed sufficiently in advance of
filing to provide such holders and legal counsel with a reasonable opportunity
to review such documents and comment thereon, and the Company shall not file
any
Registration Statement or prospectus or amendment or supplement thereto,
including documents incorporated by reference, to which such holders or their
legal counsel shall object.
3.1.5
State
Securities Laws Compliance
.
The
Company shall use its best efforts to (i) register or qualify the Registrable
Securities covered by the Registration Statement under such securities or “blue
sky” laws of such jurisdictions in the United States as the holders of
Registrable Securities included in such Registration Statement (in light of
their intended plan of distribution) may request and (ii) take such action
necessary to cause such Registrable Securities covered by the Registration
Statement to be registered with or approved by such other Governmental
Authorities as may be necessary by virtue of the business and operations of
the
Company and do any and all other acts and things that may be necessary or
advisable to enable the holders of Registrable Securities included in such
Registration Statement to consummate the disposition of such Registrable
Securities in such jurisdictions; provided, however, that the Company shall
not
be required to qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph 3.1.5 or
subject itself to taxation in any such jurisdiction.
3.1.6
Agreements
for Disposition
.
The
Company shall enter into customary agreements (including, if applicable, an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities. The representations, warranties and covenants of the
Company in any underwriting agreement which are made to or for the benefit
of
any Underwriters, to the extent applicable, shall also be made to and for the
benefit of the holders of Registrable Securities included in such registration
statement. No holder of Registrable Securities included in such registration
statement shall be required to make any representations or warranties in the
underwriting agreement except, if applicable, with respect to such holder’s
organization, good standing, authority, title to Registrable Securities, lack
of
conflict of such sale with such holder’s material agreements and organizational
documents, and with respect to written information relating to such holder
that
such holder has furnished in writing expressly for inclusion in such
Registration Statement. Holders of Registrable Securities shall agree to such
covenants and indemnification and contribution obligations for selling
stockholders as are customarily contained in agreements of that type. Further,
such holders shall cooperate fully in the preparation of the Registration
Statement and other documents relating to any offering in which they include
securities pursuant to Section 2 hereof. Each holder shall also furnish to
the
Company such information regarding itself, the Registrable Securities held
by
such holder and the intended method of disposition of such securities as shall
be reasonably required to effect the registration of the Registrable
Securities.
3.1.7
Cooperation
.
The
principal executive officer of the Company, the principal financial officer
of
the Company, the principal accounting officer of the Company and all other
officers and members of the management of the Company shall cooperate fully
in
any offering of Registrable Securities hereunder, which cooperation shall
include, without limitation, the preparation of the Registration Statement
with
respect to such offering and all other offering materials and related documents,
and participation in meetings with Underwriters, attorneys, accountants and
potential investors.
3.1.8
Records
.
The
Company shall make available for inspection by the holders of Registrable
Securities included in such Registration Statement, any Underwriter
participating in any disposition pursuant to such registration statement and
any
attorney, accountant or other professional retained by any holder of Registrable
Securities included in such Registration Statement or any Underwriter, all
financial and other records, pertinent corporate documents and properties of
the
Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any of them in connection with such
Registration Statement.
3.1.9
Opinions
and Comfort Letters
.
The
Company shall furnish to each holder of Registrable Securities included in
any
Registration Statement a signed counterpart, addressed to such holder, of (i)
any opinion of counsel to the Company delivered to any Underwriter and (ii)
any
comfort letter from the Company’s independent public accountants delivered to
any Underwriter. In the event no legal opinion is delivered to any Underwriter,
the Company shall furnish to each holder of Registrable Securities included
in
such Registration Statement, at any time that such holder elects to use a
prospectus, an opinion of counsel to the Company to the effect that the
Registration Statement containing such prospectus has been declared effective
and that no stop order is in effect.
3.1.10
Earnings
Statement
.
The
Company shall comply with all applicable rules and regulations of the Commission
and the Securities Act, and make available to its shareholders, as soon as
practicable, an earnings statement covering a period of twelve (12) months,
beginning within three (3) months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder.
3.1.11
Listing
.
The
Company shall use its best efforts to cause all Registrable Securities included
in any registration to be listed on such exchanges or otherwise designated
for
trading in the same manner as similar securities issued by the Company are
then
listed or designated or, if no such similar securities are then listed or
designated, in a manner satisfactory to the holders of a majority of the
Registrable Securities included in such registration.
3.2
Obligation
to Suspend Distribution
.
Upon
receipt of any notice from the Company of the happening of any event of the
kind
described in Section 3.1.4(iv), or, in the case of a resale registration on
Form
S-3 pursuant to Section 2.3 hereof, upon any suspension by the Company, pursuant
to a written insider trading compliance program adopted by the Company’s Board
of Directors, of the ability of all “insiders” covered by such program to
transact in the Company’s securities because of the existence of material
non-public information, each holder of Registrable Securities included in any
registration shall immediately discontinue disposition of such Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such holder receives the supplemented or amended prospectus
contemplated by Section 3.1.4(iv) or the restriction on the ability of
“insiders” to transact in the Company’s securities is removed, as applicable,
and, if so directed by the
Company,
each such holder will deliver to the Company all copies, other than permanent
file copies then in such holder’s possession, of the most recent prospectus
covering such Registrable Securities at the time of receipt of such
notice.
3.3
Registration
Expenses
.
The
Company shall bear all costs and expenses incurred in connection with any Demand
Registration pursuant to Section 2.1, any Piggy-Back Registration pursuant
to
Section 2.2, and any registration on Form S-3 effected pursuant to Section
2.3,
and all expenses incurred in performing or complying with its other obligations
under this Agreement, whether or not the Registration Statement becomes
effective, including, without limitation: (i) all registration and filing fees;
(ii) fees and expenses of compliance with securities or “blue sky” laws
(including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities); (iii) printing expenses; (iv)
the
Company’s internal expenses (including, without limitation, all salaries and
expenses of its officers and employees); (v) the fees and expenses incurred
in
connection with the listing of the Registrable Securities as required by Section
3.1.11; (vi) National Association of Securities Dealers, Inc. fees; (vii) fees
and disbursements of counsel for the Company and fees and expenses for
independent certified public accountants retained by the Company (including
the
expenses or costs associated with the delivery of any opinions or comfort
letters requested pursuant to Section 3.1.9); (viii) the fees and expenses
of
any special experts retained by the Company in connection with such registration
and (ix) the fees and expenses of one legal counsel selected by the holders
of a
majority-in-interest of the Registrable Securities included in such
registration. The Company shall have no obligation to pay any underwriting
discounts or selling commissions attributable to the Registrable Securities
being sold by the holders thereof, which underwriting discounts or selling
commissions shall be borne by such holders. Additionally, in an underwritten
offering, all selling shareholders and the Company shall bear the expenses
of
the underwriter pro rata in proportion to the respective amount of shares each
is selling in such offering.
3.4
Information
.
The
holders of Registrable Securities shall provide such information as may
reasonably be requested by the Company, or the managing Underwriter, if any,
in
connection with the preparation of any Registration Statement, including
amendments and supplements thereto, in order to effect the registration of
any
Registrable Securities under the Securities Act pursuant to Section 2 and in
connection with the Company’s obligation to comply with federal and applicable
state securities laws.
3.5
Holder
Obligations
.
No
holder of Registrable Securities may participate in any underwritten offering
pursuant to this Section 3 unless such holder (i) agrees to sell only such
holder’s Registrable Securities on the basis reasonably provided in any
underwriting agreement, and (ii) completes, executes and delivers any and all
questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements and other documents reasonably required by or under
the
terms of any underwriting agreement or as reasonably requested by the
Company.
4.
INDEMNIFICATION
AND CONTRIBUTION.
4.1
Indemnification
by the Company
.
The
Company agrees to indemnify and hold harmless each Investor and each other
holder of Registrable Securities, and each of their respective officers,
employees, affiliates, directors, partners, members, attorneys and agents,
and
each person, if any, who controls an Investor and each other holder of
Registrable Securities (within the meaning of Section 15 of the Securities
Act
or Section 20 of the Exchange Act) (each, an “Investor Indemnified Party”), from
and against any expenses, losses, judgments, claims, damages or liabilities,
whether joint or several, arising out of or based upon any untrue statement
(or
allegedly untrue statement) of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment
or
supplement to such Registration Statement, or arising out of or based upon
any
omission (or alleged omission) to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
promulgated thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration;
and
the Company shall promptly reimburse the Investor Indemnified Party for any
legal and any other expenses reasonably incurred by such Investor Indemnified
Party in connection with investigating and defending any such expense, loss,
judgment, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such expense,
loss, claim, damage or liability arises out of or is based upon any untrue
statement or allegedly untrue statement or omission or alleged omission made
in
such Registration Statement, preliminary prospectus, final prospectus, or
summary prospectus, or any such amendment or supplement, in reliance upon and
in
conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein. The Company also shall indemnify
any
Underwriter of the Registrable Securities or Purchase Option securities, their
officers, affiliates, directors, partners, members and agents and each person
who controls such Underwriter on substantially the same basis as that of the
indemnification provided above in this Section 4.1.
4.2
Indemnification
by Holders of Registrable Securities
.
Each
selling holder of Registrable Securities will, in the event that any
registration is being effected under the Securities Act pursuant to this
Agreement of any Registrable Securities held by such selling holder, indemnify
and hold harmless the Company, each of its directors and officers and each
underwriter (if any), and each other person, if any, who controls the company
or
such underwriter within the meaning of the Securities Act, against any losses,
claims, judgments, damages or liabilities, whether joint or several, insofar
as
such losses, claims, judgments, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or allegedly untrue
statement of a material fact contained in any Registration Statement under
which
the sale of such Registrable Securities was registered under the Securities
Act,
any preliminary prospectus, final prospectus or summary prospectus contained
in
the Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or the alleged
omission to state a material fact required to be stated therein or necessary
to
make the statement therein not misleading, if the statement or omission was
made
in reliance upon and in conformity with information furnished in writing to
the
Company by such selling holder expressly for use therein, and shall reimburse
the Company, its directors and officers, and each such controlling person for
any legal or other expenses reasonably incurred by any of them in connection
with investigation or defending any such loss, claim, damage, liability or
action. Each selling holder’s indemnification obligations hereunder shall be
several and not joint and shall be limited to the amount of any net proceeds
actually received by such selling holder in connection with the sale of the
Registrable Securities by such selling holder pursuant to the Registration
Statement containing such untrue statement.
4.3
Conduct
of Indemnification Proceedings
.
Promptly after receipt by any person of any notice of any loss, claim, damage
or
liability or any action in respect of which indemnity may be sought pursuant
to
Section 4.1 or 4.2, such person (the “Indemnified Party”) shall, if a claim in
respect thereof is to be made against any other person for indemnification
hereunder, notify such other person (the “Indemnifying Party”) in writing of the
loss, claim, judgment, damage, liability or action; provided, however, that
the
failure by the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which the Indemnifying Party
may have to such Indemnified Party hereunder, except and solely to the extent
the Indemnifying Party is actually prejudiced by such failure. If the
Indemnified Party is seeking indemnification with respect to any claim or action
brought against the Indemnified Party, then the Indemnifying Party shall be
entitled to participate in such claim or action, and, to the extent that it
wishes, jointly with all other Indemnifying Parties, to assume control of the
defense thereof with counsel satisfactory to the Indemnified Party. After notice
from the Indemnifying Party to the Indemnified Party of its election to assume
control of the defense of such claim or action, the Indemnifying Party shall
not
be liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that in any action
in
which both the Indemnified Party and the Indemnifying Party are named as
defendants, the Indemnified Party shall have the right to employ separate
counsel (but no more than one such separate counsel) to represent the
Indemnified Party and its controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Indemnified Party against the Indemnifying Party, with the fees and expenses
of
such counsel to be paid by such Indemnifying Party if, based upon the written
opinion of counsel of such Indemnified Party, representation of both parties
by
the same counsel would be inappropriate due to actual or potential differing
interests between them. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, consent to entry of judgment or effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, unless such judgment or
settlement includes an unconditional release of such Indemnified Party from
all
liability arising out of such claim or proceeding.
4.4
Contribution
.
4.4.1
If
the
indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is
unavailable to any Indemnified Party in respect of any loss,
claim,
damage, liability or action referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to
the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage, liability or action in such proportion as is appropriate to
reflect the relative fault of the Indemnified Parties and the Indemnifying
Parties in connection with the actions or omissions which resulted in such
loss,
claim, damage, liability or action, as well as any other relevant equitable
considerations. The relative fault of any Indemnified Party and any Indemnifying
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
Indemnified Party or such Indemnifying Party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
4.4.2
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding Section 4.4.1. The
amount paid or payable by an Indemnified Party as a result of any loss, claim,
damage, liability or action referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.4, no holder of Registrable Securities shall be
required to contribute any amount in excess of the dollar amount of the net
proceeds (after payment of any underwriting fees, discounts, commissions or
taxes) actually received by such holder from the sale of Registrable Securities
which gave rise to such contribution obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5.
UNDERWRITING
AND DISTRIBUTION.
5.1
Rule
144
.
The
Company covenants that it shall file all reports required to be filed by it
under the Securities Act and the Exchange Act and shall take such further action
as the holders of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holders to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Securities Act, as such Rules
may be amended from time to time, or any similar Rule or regulation hereafter
adopted by the Commission.
6.
MISCELLANEOUS.
6.1
Other
Registration Rights
.
The
Company represents and warrants that, except for the securities issued or
issuable upon exercise of the Purchase Option, no person, other than a holder
of
the Registrable Securities has any right to require the Company to register
any
shares of the Company’s capital stock for sale or to include shares of the
Company’s capital stock in any registration filed by the Company for the sale of
shares of capital stock for its own account or for the account of any other
person.
6.2
Assignment;
No Third Party Beneficiaries
.
This
Agreement and the rights, duties and obligations of the Company hereunder may
not be assigned or delegated by the Company in whole or in part. This Agreement
and the rights, duties and obligations of the holders of Registrable Securities
hereunder may be freely assigned or delegated by such holder of Registrable
Securities in conjunction with and to the extent of any transfer of Registrable
Securities by any such holder. This Agreement and the provisions hereof shall
be
binding upon and shall inure to the benefit of each of the parties hereto,
to
Broadband Capital Management, Inc. and their respective successors and the
permitted assigns of the Investor or holder of Registrable Securities or of
any
assignee of the Investor or holder of Registrable Securities. This Agreement
is
not intended to confer any rights or benefits on any persons that are not party
hereto other than as expressly set forth in Article 4 and this Section
6.2.
6.3
Notices
.
All
notices, demands, requests, consents, approvals or other communications
(collectively, “Notices”) required or permitted to be given hereunder or which
are given with respect to this Agreement shall be in writing and shall be
personally served, delivered by reputable air courier service with charges
prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall
have
specified most recently by written notice. Notice shall be deemed given on
the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile; provided, that if such service or transmission is not on
a
business
day or
is after normal business hours, then such notice shall be deemed given on the
next business day. Notice otherwise sent as provided herein shall be deemed
given on the next business day following timely delivery of such notice to
a
reputable air courier service with an order for next-day delivery.
To
the
Company:
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Attn:
John Wang, Chief Executive Officer
with
a
copy to:
Loeb
& Loeb LLP
345
Park
Avenue
New
York,
New York 10154
Attn:
Mitchell S. Nussbaum, Esq.
To
an
Investor, to:
John
Wang
[address]
Robert
J.
Eu
[address]
Stephen
N. Cannon
[address]
AEX
Enterprise, Ltd.
[address]
Cannon
Family Irrevocable Trust
[address]
WR
Hambrecht + Co., LLC
[address]
Hambrecht
1980 Revocable Trust
[address]
Shea
Ventures LLC
[address]
Marbella
Capital Partners Ltd.
[address]
6.4
Severability
.
This
Agreement shall be deemed severable, and the invalidity or unenforceability
of
any term or provision hereof shall not affect the validity or enforceability
of
this Agreement or of any other term or provision hereof. Furthermore, in lieu
of
any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a provision as similar
in
terms to such invalid or unenforceable provision as may be possible and be
valid
and enforceable.
6.5
Counterparts;
Facsimile Signatures
.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and
the
same instrument. Facsimile signatures shall be deemed to be original signatures
for all purposes of this Agreement.
6.6
Entire
Agreement
.
This
Agreement (including all agreements entered into pursuant hereto and all
certificates and instruments delivered pursuant hereto and thereto) constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties, whether oral
or written.
6.7
Modifications
and Amendments
.
No
amendment, modification or termination of this Agreement shall be binding upon
any party unless executed in writing by such party.
6.8
Titles
and Headings
.
Titles
and headings of sections of this Agreement are for convenience only and shall
not affect the construction of any provision of this Agreement.
6.9
Waivers
and Extensions
.
Any
party to this Agreement may waive any right, breach or default which such party
has the right to waive, provided that such waiver will not be effective against
the waiving party unless it is in writing, is signed by such party, and
specifically refers to this Agreement. Waivers may be made in advance or after
the right waived has arisen or the breach or default waived has occurred. Any
waiver may be conditional. No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof nor of any other agreement or provision herein contained. No waiver
or
extension of time for performance of any obligations or acts shall be deemed
a
waiver or extension of the time for performance of any other obligations or
acts.
6.10
Specific
Performance
.
Each of
the parties acknowledges and agrees that the other parties would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the parties agrees that the other parties shall be entitled
to an injunction or injunctions (without the necessity of posting a bond or
other security) to prevent breaches of the provisions of this Agreement and
to
enforce specifically this Agreement and the terms and provisions hereof in
any
action instituted in any court of the United States or any state or other
foreign court or governmental body having jurisdiction over the parties and
the
matter, in addition to any other remedy to which they may be entitled, at law
or
in equity.
6.11
Remedies
Cumulative
.
In the
event that the Company fails to observe or perform any covenant or agreement
to
be observed or performed under this Agreement, the Investor or any other holder
of Registrable Securities may proceed to protect and enforce its rights by
suit
in equity or action at law, whether for specific performance of any term
contained in this Agreement or for an injunction against the breach of any
such
term or in aid of the exercise of any power granted in this Agreement or to
enforce any other legal or equitable right, or to take any one or more of such
actions, without being required to post a bond. None of the rights, powers
or
remedies conferred under this Agreement shall be mutually exclusive, and each
such right, power or remedy shall be cumulative and in addition to any other
right, power or remedy, whether conferred by this Agreement or now or hereafter
available at law, in equity, by statute or otherwise.
6.12
Governing
Law
.
This
Agreement shall be governed by, interpreted under, and construed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed within the State of New York, without giving effect to
any
choice-of-law provisions thereof that would compel the application of the
substantive laws of any other jurisdiction. Each of the parties hereby agrees
that any action, proceeding or claim against it arising out of or relating
in
any way to this Agreement shall be brought and enforced in the courts of the
State of New York or the United States District Court for the Southern District
of New York (each, a “New York Court”), and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. Each of the parties hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum.
6.13
Waiver
of Trial by Jury
.
Each
party hereby irrevocably and unconditionally waives the right to a trial by
jury
in any action, suit, counterclaim or other proceeding (whether based on
contract, tort or otherwise) arising out of, connected with or relating to
this
Agreement, the transactions contemplated hereby, or the actions of the Investor
in the negotiation, administration, performance or enforcement
hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to
be executed and delivered by their duly authorized representatives as of the
date first written above.
|
|
|
|
|
|
HAMBRECTH
ASIA
ACQUISITION CORPORATION
|
|
|
|
|
|
By:
|
|
|
|
Name:
John Wang
|
|
|
Title:
Chief Executive Officer,
President and Director
|
|
|
|
|
|
|
INVESTORS:
|
|
|
|
|
|
|
|
|
|
|
John
Wang
|
|
|
|
|
|
|
|
|
|
|
Robert
J. Eu
|
|
|
|
|
|
|
CANNON
FAMILY IRREVOCABLE TRUST
|
|
|
|
|
|
By:
|
|
|
|
Stephen
N. Cannon, Trustee
|
|
|
|
|
|
|
AEX
ENTERPRISES LIMITED
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
W.R.
HAMBRECHT + CO., LLC
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
HAMBRECHT
1980 REVOCABLE TRUST
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
MARBELLA
CAPITAL PARTNERS LTD.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
Exhibit
10.15
WARRANT
PURCHASE AGREEMENT (this “Agreement”) made as of this ___________day of
_________, 2008 among Hambrecht Asia Acquisition Corp., a Delaware corporation
(the “Company”) and the undersigned (the “Purchasers”).
WHEREAS,
the Company has filed with the Securities and Exchange Commission (the “SEC”) a
registration statement on Form S-1, as amended (File No. 333-146147) (the
“Registration Statement”), in connection with the Company’s initial public
offering (the “IPO”) of 4,000,000 units (the “Units”), each unit consisting of
one of the Company’s ordinary shares, $0.001 par value (the “Ordinary Shares”),
and (ii) one warrant (the “Warrants”), each warrant to purchase one Ordinary
Share; and
WHEREAS,
immediately prior to the consummation of the IPO, the Company desires to sell
in
a private placement to the Purchasers (the “Placement”) an aggregate of 750,000
warrants (the “Placement Warrants”) substantially identical to the Warrants
being issued in the IPO pursuant to the terms and conditions hereof and as
set
forth in the Registration Statement, except that the Placement Warrants to
be
issued in the Placement shall not be registered under the Securities Act of
1933, as amended (the “Securities Act”); and
WHEREAS,
each Purchaser desires to acquire the number of Placement Warrants set forth
opposite his name on Schedule A hereto; and
WHEREAS,
except as provided herein, the Placement Warrants shall be governed by the
Warrant Agreement filed as an exhibit to the Registration Statement;
and
WHEREAS,
the Purchasers are entitled to registration rights with respect to the Placement
Warrants and the Ordinary Shares underlying the Placement Warrants (the
“Underlying Shares”) on the terms set forth in this Agreement;
NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as
follows:
1.
Purchase
of Placement Warrants
.
The
Purchasers hereby agree, directly or through their nominees, to purchase an
aggregate of 750,000 Placement Warrants at a purchase price of $1.00 per
Placement Warrant, or an aggregate of $750,000 (the “Purchase Price”). Such
purchases shall be in the names and amounts set forth on Schedule A
hereto.
2.
Closing
.
The
closing of the purchase and sale of the Placement Warrants (the “Closing”) will
take place at such time and place as the parties may agree (the “Closing Date”),
but in no event later than one business day prior to the closing date (the
“IPO
Closing Date”) of the IPO. On or prior to the IPO Closing Date, the Purchasers
shall pay the Purchase Price by wire transfer of funds to Loeb & Loeb,
outside counsel for the Company. On the Closing Date, the Company shall cause
Loeb & Loeb to transfer the Purchase Price to the trust account at JPMorgan
Chase NY Bank, maintained by Continental Stock Transfer & Trust Company,
acting as trustee (the “Trust Account”). The certificates for the Placement
Warrants shall be placed into escrow pursuant to the Securities Escrow Agreement
dated __________, 2008 by and among Continental and the other signatories
thereto.
3.
Representations
and Warranties of the Purchasers
.
Each
Purchaser hereby represents and warrants to the Company that:
3.2
The
Purchaser is an “accredited investor” as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
3.3
The
Placement Warrants are being acquired for the Purchaser’s own account, only for
investment purposes and not with a view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the Securities
Act.
3.4
The
Purchaser has the full right, power and authority to enter into this Agreement
and this Agreement is a valid and legally binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms.
3.5
The
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed on or made any recommendation
or
endorsement of the securities or the fairness or suitability of the investment
in the securities nor have such authorities passed upon or endorsed the merits
of the offering of the securities.
4.
Registration
Rights
.
The
Purchasers shall have registration rights pursuant to the Registration Rights
Agreement, dated as of _____________, 2008, by and among the Company and the
Investors listed on the signature page thereto.
5.
Waiver
of Claims Against Trust Account
.
Each
Purchaser hereby waives any and all right, title, interest or claim of any
kind
in or to any distributions from the Trust Account with respect to any Ordinary
Shares acquired by the Purchaser in connection with the exercise of the
Placement Warrants purchased pursuant to this Agreement ("Claim") and hereby
waives any Claim the undersigned may have in the future as a result of, or
arising out of, any contracts or agreements with the Company and will not seek
recourse against the Trust Account for any reason whatsoever.
6.
Legends;
Denominations
6.1
Legend
.
The
Company will issue the Placement Warrants, and when issued the Underlying
Shares, purchased by Purchaser in the name of Purchaser and in such
denominations to be specified by Purchaser. The Placement Warrants and
Underlying Shares will bear the following legend and appropriate "stop transfer"
instructions:
“
THE
SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER THE
SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS
CORPORATION, IS AVAILABLE.”
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS CONTAINED IN A SECURITIES ESCROW AGREEMENT (THE “AGREEMENT”) AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE
TERM
OF THE ESCROW PERIOD (AS DEFINED IN THE AGREEMENT).”
7.
Forfeiture
of Warrants
.
7.1.
Failure
to Consummate Business Combination
.
The
Placement Warrants shall be forfeited to the Company in the event the Company
does not consummate a business combination within 18, 24 or 36 months from
the
date of the final prospectus relating to the Company’s IPO, as described in the
Registration Statement.
7.2.
Termination
of Rights as holder; Escrow
.
If the
Placement Warrants are forfeited in accordance with this Section 7, then after
such time the Purchaser (or successor in interest), shall no longer have any
rights as a holder of such Placement Warrants, and the Company shall take such
action as is appropriate to cancel such Placement Warrants. To effectuate the
foregoing, all certificates representing Placement Warrants shall be held in
escrow as provided in Section 2 hereof. In addition, Purchaser hereby
irrevocably grants the Company a limited power of attorney for the purpose
of
effectuating the foregoing.
8.
Waiver
and Indemnification
.
Each
Purchaser hereby waives any and all rights to assert any present or future
claims, including any right of rescission, against the Company or the
underwriters in the IPO with respect to their purchase of the Placement
Warrants, and each Purchaser agrees jointly and severally to indemnify and
hold
the Company and the underwriters in the IPO harmless from all losses, damages
or
expenses that relate to claims or proceedings brought against the Company or
such underwriters by Purchasers of the Placement Warrants.
9.
Counterparts;
Facsimile
.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and all of which taken together
shall
constitute one and the same instrument. This Agreement or any counterpart may
be
executed via facsimile transmission, and any such executed facsimile copy shall
be treated as an original.
10.
Governing
Law
.
This
Agreement shall for all purposes be deemed to be made under and shall be
construed in accordance with the laws of the State of New York. Each of the
parties hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of New York or the United States District Court for
the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. Each of the parties hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the ____day
of ___________, 2007.
|
|
|
|
|
|
HAMBRECHT
ASIA ACQUISITION CORP.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
PURCHASERS:
|
|
|
|
|
|
AEX
ENTERPRISES LIMITED
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
W.R.
HAMBRECHT + CO., LLC
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
HAMBRECHT
1980 REVOCABLE TRUST
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
MARBELLA
CAPITAL PARTNERS LTD.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
SCHEDULE
A
Exhibit
10.16
RIGHT
OF FIRST REFUSAL AND
CORPORATE
OPPORTUNITIES AGREEMENT
This
Right of First Refusal and Corporate Opportunities Agreement (this “Agreement”)
is made as of ___________, 2008 by and between Hambrecht Asia Acquisition Corp.,
a Cayman Islands company (the “Company”) and ___________ (the “Granting
Company”) in connection with the Company’s proposed initial public offering (the
“IPO”) of units pursuant to a registration statement on Form S-1 (as amended,
the “Registration Statement”), filed by the Company with the United States
Securities and Exchange Commission.
WHEREAS,
certain officers and directors of the Company are also officers and directors
of
the Granting Company; and
WHEREAS,
each of the Company and the Granting Company may be seeking business
opportunities in the People’s Republic of China, and the parties hereto desire
to enter into this Agreement to clarify the business opportunities for which
each party shall have a right of first refusal.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements as set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1.
Right
of First Refusal
.
a.
Grant
of Right
.
For the
term specified in Section 2 hereof, the Granting Company agrees to grant to
the
Company (i) in its certificate of incorporation or equivalent document or (ii)
by written action of its board of directors and/or shareholders, as may be
required under applicable law governing the Granting Company, expressly for
the
benefit of the Company (in either event, the “Granting Company Document”), a
right of first refusal to any corporate opportunities belonging to it that
may
constitute a suitable Business Combination (as defined herein) for the Company.
Specifically,
the
Granting Company shall refuse to review or consider any investment or
acquisition opportunity in a business or businesses the Company may deem to
be a
Business Combination, as determined by the officer or director of the Granting
Company that is also an officer or director of the Company until after the
Company has rejected such opportunity. The Granting Company will not enter
into
any agreement to purchase or invest in such business or businesses until after
the Company has rejected such opportunity. D
ecisions
by the Company to release the Granting Company to pursue any corporate
opportunity concerning a Business Combination will be made by a majority of
the
Company’s disinterested directors.
b.
Scope
of Right
. As
used herein, the term “Business Combination”
shall
mean an acquisition by the Company, by merger, stock exchange, asset
acquisition, reorganization or similar business combination, or control through
contractual arrangements, of an operating business or businesses in the People’s
Republic of China
(each a
“Target”). Notwithstanding the above, the term “Business Combination” shall not
include any company with respect to which the Granting Company has initiated
any
contacts or entered into any discussions, formal or informal, or negotiations
regarding a company being acquired by the Granting Company prior to the date
hereof.
c.
General
.
Any
partner, principal, director, officer or employee of the Granting Company that
shall become aware of a corporate opportunity relating to a Target shall provide
written notice of the opportunity to the Company within five (5) business days
of its identification of the corporate opportunity. The Granting Company further
agrees it will not enter into any agreement to purchase or invest in a Target
until the Company has had a reasonable period of time to determine whether
or
not to pursue the opportunity. The provisions of this Section (c) shall be
set
forth in the Granting Company Document.
2.
Term
.
This
Agreement shall become effective upon execution and shall remain in effect
for a
period expiring upon the earlier of: (i) the consummation by the Company of
a
Business Combination or (ii) the Company’s dissolution and liquidation, each in
the circumstances and in the manner described in the Registration Statement
(the
“Term”).
3.
Notices
.
All
notices or communications hereunder shall be in writing, addressed as
follows:
To
the
Company:
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Attn:
John Wang, Chief Executive Officer
with
a
copy to:
Mitchell
Nussbaum
Loeb
& Loeb LLP
345
Park
Avenue
New
York,
New York 10154
If
to the
Granting Company:
[contact
information]
with
a
copy to:
[contact
information]
with
a
copy to:
Broadband
Capital Management
712
Fifth
Avenue, 49th Floor
New
York,
NY 10019
Attn:
T.
Corby Hocker
with
a
copy to:
Douglas
Ellenoff
Ellenoff
Grossman & Schole LLP
370
Lexington Avenue
New
York,
NY 10017
4.
Headings
.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
5.
Severability
.
If any
provision of this Agreement shall be declared to be invalid or unenforceable,
in
whole or in part, such invalidity or unenforceability shall not affect the
remaining provisions hereof, which shall remain in full force and
effect.
6.
Amendment
.
This
Agreement may only be amended by a written instrument executed by each of the
parties hereto. Notwithstanding the foregoing, this Agreement may not be amended
to provide for its termination prior to the expiration of the Term without
the
approval of the affirmative vote of a majority of the Company’s ordinary shares
purchased in the IPO.
7.
Survival
.
The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations. The provisions of this
Section 7 are in addition to the survivorship provisions of any other
section of this Agreement
.
8.
Waiver
Against Trust Account
.
Granting
Company hereby (a) waives any and all right, title, interest or claim of any
kind (a “Claim”) in or to all funds held in the trust account established for
the benefit of the public shareholders of the Company (“Trust Account”) and any
remaining net assets of the Company upon liquidation of the Trust Account and
dissolution of the Company, (b) waives any Claim the Granting Company may have
in the future as a result of, or arising out of, any contracts or agreements
with the Company and (c) agrees it will not seek recourse against the Trust
Account for any reason whatsoever.
9.
Entire
Agreement
.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
10.
Governing
Law, Venue, etc.
a.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to the conflict of laws
principles thereof. The parties: (i) agree that any legal suit, action or
proceeding arising out of or relating to this agreement and/or the transactions
contemplated hereby shall be instituted exclusively in New York Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York, (ii) waive any objection which such party may have now
or
hereafter to the venue of any such suit, action or proceeding and (iii)
irrevocably and exclusively consent to the jurisdiction of the New York Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding arising out of
this
Agreement.
b.
The
parties further agree to accept and acknowledge service of any and all process
which may be served in any such suit, action or proceeding in the New York
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York and agrees service of process upon the Company
mailed by certified mail to the Company’s address shall be deemed in every
respect effective service of process upon the Company in any such suit, action
or proceeding, and service of process upon mailed by certified mail to the
Granting Company addresses shall be deemed in every respect effective service
process upon the parties, in any such suit, action or proceeding arising out
of
this Agreement.
c.
THE
PARTIES HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
11.
Execution
in Counterparts
.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto. Delivery of a signed counterpart of this Agreement by fax or email/.pdf
transmission shall constitute valid and sufficient delivery
thereof.
12.
Waiver,
etc.
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
13.
Third
Party Beneficiaries.
The
parties hereto hereby acknowledge that the underwriters of the IPO, including,
without limitation, Broadband Capital Management (“Broadband”), are third party
beneficiaries of this Agreement and this Agreement may not be modified or
changed without the prior written consent of Broadband.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first specified above.
|
|
|
|
|
|
HAMBRECHT
ASIA ACQUISITION CORP.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
Exhibit
10.18
______,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a purchaser of warrants exercisable for Ordinary Shares of
Hambrecht Asia Acquisition Corp. (the “Company”), in consideration of Broadband
Capital Management LLC (“Broadband”) entering into a letter of intent,
dated [
], 2007 (“Letter of Intent”), to underwrite an initial public offering
(“IPO”) of the securities of the Company and embarking on, undertaking and
continuing to participate in the IPO process, hereby agrees as follows (certain
capitalized terms used herein are defined in paragraph XII hereof):
I.
(1) Except with respect to any of the IPO Shares acquired by the
undersigned in connection with or following the IPO, the undersigned hereby
(a)
waives any and all right, title, interest or claim of any kind (a “Claim”) in or
to all funds in the Trust Account and any remaining net assets of the Company
upon liquidation of the Trust Account and dissolution of the Company, (b)
waives
any Claim the undersigned may have in the future as a result of, or arising
out
of, any contracts or agreements with the Company and (c) agrees that the
undersigned will not seek recourse against the Trust Account for any reason
whatsoever.
II.
(1) Neither the undersigned, any member of the Immediate Family of the
undersigned, nor any affiliate of the undersigned (“Affiliate”) will be entitled
to receive, and no such person will accept, any compensation for services
rendered to the Company prior to, or in connection with, the consummation
of a
Business Combination; provided, however, that the undersigned shall be entitled
to reimbursement from the Company for his out-of-pocket expenses incurred
in
connection with seeking and consummating a Business Combination.
III.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
Affiliate of the undersigned will be entitled to receive or accept a finder's
fee or any other compensation in the event the undersigned, any member of
the
Immediate Family of the undersigned or any Affiliate originates a Business
Combination.
IV.
The
undersigned has full right and power, without violating any agreement by
which
he is bound, to enter into this letter agreement.
V.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon this agreementsand the representations and warranties set forth
herein in proceeding with the IPO.
VI.
[Intentionally
Omitted]
VII.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that he will vote all Ordinary Shares owned by him prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
VIII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against him arising out of or relating in any way to
this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient
forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right
of
either party to serve process in any other manner permitted by law.
IX.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Immediate Family” shall mean, with respect to any person, such person’s spouse,
children, parents and siblings (including any such relative by adoption
or
marriage); (iv) “Insiders” shall mean all officers, directors and shareholders
of the Company immediately prior to the IPO; (v) “Insider Shares” shall mean all
of the Ordinary Shares owned by an Insider prior to the IPO; (vi) “IPO Shares”
shall mean the Ordinary Shares issued in the Company’s IPO; and (vii) “Trust
Account” shall mean the trust account in which most of the proceeds to the
Company of the IPO will be deposited and held for the benefit of the holders
of
the IPO shares, as described in greater detail in the prospectus relating
to the
IPO.
X.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
|
|
|
|
SHEA
VENTURES LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
Exhibit
10.19
_______,
2008
Hambrecht
Asia Acquisition Corp.
13/F
Tower 2
New
World
Tower
18
Queens
Road Central
Hong
Kong
Broadband
Capital Management LLC
712
Fifth
Avenue
New
York,
New York 10019
Re:
Initial Public Offering
Gentlemen:
The
undersigned, a purchaser of warrants exercisable for Ordinary Shares of
Hambrecht Asia Acquisition Corp. (the “Company”), in consideration of Broadband
Capital Management LLC (“Broadband”) entering into a letter of intent,
dated [
], 2007 (“Letter of Intent”), to underwrite an initial public offering
(“IPO”) of the securities of the Company and embarking on, undertaking and
continuing to participate in the IPO process, hereby agrees as follows (certain
capitalized terms used herein are defined in paragraph XII hereof):
I.
(1) Except with respect to any of the IPO Shares acquired by the
undersigned in connection with or following the IPO, the undersigned hereby
(a)
waives any and all right, title, interest or claim of any kind (a “Claim”) in or
to all funds in the Trust Account and any remaining net assets of the Company
upon liquidation of the Trust Account and dissolution of the Company, (b)
waives
any Claim the undersigned may have in the future as a result of, or arising
out
of, any contracts or agreements with the Company and (c) agrees that the
undersigned will not seek recourse against the Trust Account for any reason
whatsoever.
II.
(
2)
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
affiliate of the undersigned (“Affiliate”) will be entitled to receive, and no
such person will accept, any compensation for services rendered to the Company
prior to, or in connection with, the consummation of a Business Combination;
provided, however, that the undersigned shall be entitled to reimbursement
from
the Company for his out-of-pocket expenses incurred in connection with seeking
and consummating a Business Combination.
III.
Neither
the undersigned, any member of the Immediate Family of the undersigned, nor
any
Affiliate of the undersigned will be entitled to receive or accept a finder’s
fee or any other compensation in the event the undersigned, any member of
the
Immediate Family of the undersigned or any Affiliate originates a Business
Combination.
(1)
The
undersigned represents and warrants that:
(a)
He
is not
subject to or a respondent in any legal action for any injunction relating
to,
or any cease and desist order or order or stipulation to desist or refrain
from
any act or practice relating to the offering to the offering of securities
in
any jurisdiction;
(b)
No
petition under the Federal bankruptcy laws or any state insolvency law has
been
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of the undersigned, or
any
partnership in which the undersigned was or is a general partner at or within
two years prior to the date hereof, or any corporation or business association
of which the undersigned was an executive officer at or within two years
prior
to the date hereof;
(c)
He
has
never been convicted of or plead guilty to any crime (i) involving any fraud
or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he has
not
plead guilty to or been convicted in any criminal proceeding nor
is
the
undersigned currently a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(d)
The
undersigned has not been the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining the undersigned from,
or
otherwise limiting, the following activities:
(e)
Acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any
other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter,
broker
or dealer in securities, or as an affiliated person, director or employee
of any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity; or
(f)
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws;
IV.
The
undersigned has full right and power, without violating any agreement by
which
he is bound, to enter into this letter agreement.
V.
The
undersigned acknowledges and understands that Broadband and the Company will
rely upon the agreements, representations and warranties set forth herein
in
proceeding with the IPO.
VI.
The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Broadband and the Company and their respective
legal representatives or agents (including any investigative search firm
retained by Broadband or the Company) any information they may have about
the
undersigned’s background and finances (the “Information”). Neither Broadband nor
the Company nor their respective agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
VII.
In
connection with the vote required to consummate a Business Combination, the
undersigned agrees that he will vote all Ordinary Shares owned by him prior
to
the IPO (the “Insider Shares”), if any, in accordance with the majority of the
votes cast by the holders of the IPO Shares, and all Ordinary Shares acquired
in
or following the IPO in favor of a Business Combination.
VIII.
This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The undersigned hereby (i) agrees that any action,
proceeding or claim against him arising out of or relating in any way to
this
letter agreement (a “Proceeding”) shall be brought and enforced in the federal
courts of the United States of America for the Southern District of New York,
and irrevocably submits to the jurisdiction of such courts, which jurisdiction
shall be exclusive, (ii) waives any objection to the exclusive jurisdiction
of
such courts and any objection that such courts represent an inconvenient
forum
and (iii) irrevocably agrees to appoint _________ as agent for the service
of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent
is
unable to act as such, the undersigned will promptly notify the Company and
Broadband and appoint a substitute agent acceptable to each of the Company
and
Broadband within 30 days and nothing in this letter will affect the right
of
either party to serve process in any other manner permitted by law.
IX.
As
used
herein, (i) a “Business Combination” shall mean an acquisition by the Company,
by merger, stock exchange, asset acquisition, reorganization or similar business
combination, or control through contractual arrangements, of an operating
business or businesses in the People’s Republic of China; (ii) “Ordinary Share”
shall mean the ordinary share, par value $0.001 per share, of the Company;
(iii)
“Immediate Family” shall mean, with respect to any person, such person’s spouse,
children, parents and siblings (including any such relative by adoption
or
marriage); (iv) “Insiders” shall mean all officers, directors and shareholders
of the Company immediately prior to the IPO; (v) “Insider Shares” shall mean all
of the Ordinary Shares owned by an Insider prior to the IPO; (vi) “IPO Shares”
shall mean the Ordinary Shares issued in the Company’s IPO; and (vii) “Trust
Account” shall mean the trust account in which most of the proceeds to the
Company of the IPO will be deposited and held for the benefit of the holders
of
the IPO shares, as described in greater detail in the prospectus relating
to the
IPO.
X.
This
letter agreement shall supersede any other letter agreement signed by the
undersigned with respect to the subject matter hereof.
|
|
|
|
MARBELLA CAPITAL PARTNERS
LTD.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the use in this Registration Statement on Form S-1 to Form F-1
of our
report dated January 30, 2008, relating to the financial statements of Hambrecht
Asia Acquisition Corp., and to the reference to our Firm under the caption
“Experts” in the Prospectus.
Roseland,
New Jersey
January
31, 2008
